Countrywide Financial Corporation

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the quarter ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. For further information, refer to the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2003 for Countrywide Financial Corporation (the “Company”).

As more fully discussed in Note 10 — Notes Payable, the Company adopted an amendment to FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46R”) during the current period. The effect of the FASB’s amendment of FIN 46R on the Company is to require that Countrywide no longer include certain subsidiary trusts in its consolidated reporting group. The effect of this change is that the Company now excludes the trust-preferred securities issued by the subsidiary trusts from its consolidated balance sheets and includes the junior subordinated debentures issued by CHL and the Company to the trusts in Notes Payable.

In April 2004, the Company completed a 3-for-2 stock split effected as a stock dividend. All references in the accompanying consolidated balance sheets, consolidated statements of earnings and notes to consolidated financial statements to the number of common shares and earnings per share amounts have been adjusted accordingly.

Certain amounts reflected in the consolidated financial statements for the quarter ended March 31, 2003 have been reclassified to conform to the presentation for the quarter ended March 31, 2004.

Basic earnings per share is determined using net earnings divided by the weighted-average shares outstanding during the period. Diluted earnings per share is computed by dividing net earnings available to common shareholders by the weighted-average shares outstanding, assuming all potential dilutive common shares were issued.

As more fully discussed in Note 10, the Company has outstanding debentures convertible into common stock of the Company upon the stock reaching certain specified levels, or if the credit ratings of the debentures drops below investment grade. At March 31, 2004, the conditions providing the holders of the debentures the right to convert their securities to shares of common stock during the quarter ending June 30, 2004, had been met as a result of the Company’s stock price attaining a specified level. Therefore, the effect of conversion of the debentures was included in the Company’s calculation of diluted earnings per share for the quarter ended March 31, 2004. For the quarter ended March 31, 2003, the conditions providing the holders of the debentures the right to convert their securities had not been met and the effect of conversion of the securities was not included in the computation of diluted EPS.

The following table summarizes the basic and diluted earnings per share calculations for the quarters ended March 31, 2004 and 2003:

The Company generally grants to employees stock options for a fixed number of shares with an exercise price equal to the fair value of the shares at the date of grant. The Company recognizes compensation expense related to its stock option plans only to the extent that the fair value of the shares at the grant date exceeds the exercise price.

Had the estimated fair value of the options granted been included in compensation expense, the Company’s net earnings and earnings per share would have been as follows:

The fair value of each option grant is estimated on the date of grant using a Black-Scholes option-pricing model that has been modified to consider cash dividends to be paid. To determine periodic compensation expense for purposes of this pro forma disclosure, the fair value of each option grant is amortized over the vesting period. The weighted-average assumptions used to value the option grants and the resulting average estimated values were as follows:

During the quarter ended March 31, 2004, options to purchase 3,750 shares of stock were not included in the computation of earnings per share because they were anti-dilutive. During the quarter ended March 31, 2003, no options were anti-dilutive.

The activity in Mortgage Servicing Rights (“MSRs”) for the quarter ended March 31, 2004 and 2003 is as follows:

The estimated fair value of mortgage servicing rights was $6.5 billion and $5.3 billion as of March 31, 2004 and 2003, respectively.

The long-term estimated weighted average prepayment speed (annual rate) for the MSRs was approximately 21% and 24% at December 31, 2003 and March 31, 2004, respectively, while the weighted average note rate in the servicing portfolio declined over that period from 6.1% to 6.0%. The MSR option-adjusted spread (“OAS”) at March 31, 2004 ranged from 3.4% for conventional, conforming MSRs to 7.4% for subprime MSRs. In comparison, the MSR OAS at December 31, 2003 ranged from 3.5% for conventional, conforming MSRs to 7.5% for subprime MSRs.

The following table summarizes the Company’s estimate of amortization of the existing MSRs for the five-year period ending March 31, 2009. This projection was developed using the assumptions made by management in its March 31, 2004 valuation of MSRs. The assumptions underlying the following estimate will change as market conditions and portfolio composition and behavior change, causing both actual and projected amortization levels to change over time. Therefore, the following estimates will change in a manner and amount not presently determinable by management.

Trading securities, which consist of trading securities owned and trading securities pledged as collateral, at March 31, 2004 and December 31, 2003 include the following:

As of March 31, 2004, $11.0 billion of the Company’s trading securities had been pledged as collateral for financing purposes, of which the counterparty has the contractual right to sell or re-pledge $1.3 billion. The Company had recorded $349.4 million and $163.9 million in gains that related to trading securities still held at March 31, 2004 and at December 31, 2003, respectively.

As of March 31, 2004, the Company had accepted collateral with a fair value of $15.7 billion for which it had the contractual ability to sell or re-pledge. As of March 31, 2004, the Company had re-pledged $15.3 billion of such collateral for financing purposes, of which $2.7 billion related to amounts offset against securities purchased under agreements to resell under master netting arrangements.

As of December 31, 2003, the Company had accepted collateral with a fair value of $11.8 billion for which it had the contractual ability to sell or re-pledge. As of December 31, 2003, the Company had re-pledged $10.8 billion of such collateral for financing purposes, of which $1.2 billion related to amounts offset against securities purchased under agreements to resell under master netting arrangements.

Loans held for investment as of March 31, 2004 and December 31, 2003 include the following:

At March 31, 2004, mortgage loans held for investment totaling $4.5 billion and $16.4 billion were pledged to secure securities sold under agreements to repurchase and Federal Home Loan Bank advances, respectively.

At March 31, 2004, the Company had accepted collateral with a fair value of $3.0 billion securing warehouse lending advances for which it had the contractual ability to sell or re-pledge. As of March 31, 2004, no such collateral had been re-pledged.

Total allowance for loan losses as of March 31, 2004 and December 31, 2003 are $93.1 million and $78.4 million, respectively.

Investments in other financial instruments at March 31, 2004 and December 31, 2003 include the following:

All of the financial instruments listed above are classified as available-for-sale, with the exception of derivative financial instruments and interest-only securities held for trading.

At March 31, 2004, the Company had pledged $3.9 billion of home equity-backed securities and $0.9 billion of mortgage-backed securities to secure repurchase agreements.

Amortized cost and fair value of available-for-sale securities at March 31, 2004 and December 31, 2003 are as follows:

At March 31, 2004, the Company did not hold any securities classified as available-for-sale that had been in a continuous unrealized loss position for more than twelve months.

Gross gains and losses realized on the sales of available-for-sale securities are as follows:

At March 31, 2004, the Company had pledged $2.3 billion of other assets to secure repurchase agreements, of which the counterparty has the right to sell or re-pledge $1.9 billion.

The Company routinely enters into short-term financing arrangements to sell securities under agreements to repurchase. The repurchase agreements are collateralized by mortgage loans and securities. All securities underlying repurchase agreements are held in safekeeping by broker-dealers or banks. All agreements are to repurchase the same, or substantially identical, securities.

At March 31, 2004, repurchase agreements were secured by $12.8 billion of securities purchased under agreements to resell, $11.0 billion of trading securities, $4.8 billion of investments in other financial instruments, $4.5 billion of loans held for investment, $2.3 billion of other assets and $0.3 billion of mortgage loans held for sale. As of March 31, 2004, $2.7 billion of the pledged securities purchased under agreements to resell related to amounts offset against securities sold under agreements to repurchase pursuant to master netting agreements.

Notes payable as of March 31, 2004 and December 31, 2003 consist of the following:

During the quarter ended March 31, 2004, Countrywide Home Loans, Inc. (“CHL”), the Company’s principal mortgage banking subsidiary, issued medium-term notes under shelf registration statements or pursuant to its Euro medium-term note program as follows:

Of the $3.4 billion of floating-rate medium-term notes issued by the Company during the quarter ended March 31, 2004, $1.3 billion were effectively converted to fixed-rate debt using interest rate swap contracts.

During the quarter ended March 31, 2004, CHL redeemed $1.1 billion of maturing medium-term notes.

As of March 31, 2004, $1.5 billion of foreign currency-denominated medium-term notes were outstanding. Such notes are denominated in Yen, Deutsche Marks, French Francs, Portuguese Escudos, and Euros. These notes have been effectively converted to U.S. dollars through currency swaps.

In April 2003, the Company formed a wholly-owned special purpose entity for the purpose of issuing commercial paper in the form of short-term Secured Liquidity Notes (“SLNs”) to finance certain of its Mortgage Loan Inventory. The special purpose entity issues short-term notes with maturities of up to 180 days, extendable to 300 days. The SLNs bear interest at prevailing money market rates approximating LIBOR. The SLN program’s capacity, based on aggregate commitments from underlying credit enhancers, was $18.2 billion at March 31, 2004. The Company has pledged $9.2 billion in Mortgage Loan Inventory to secure the asset-backed commercial paper. For the quarter ended March 31, 2004, the average borrowings

under this facility totaled $11.9 billion, and the weighted average interest rate of the commercial paper was 1.10%. At March 31, 2004, the average interest rate of the commercial paper outstanding was 1.11%.

During the quarter ended March 31, 2004, the company obtained $1.8 billion of advances from the Federal Home Loan Bank. The average interest rate and maturity schedule of these new advances follows:

As more fully discussed in Note 2 — Summary of Significant Accounting Policies “Implementation of New Accounting Standards”, included in the Company’s financial statements in Countrywide’s Annual Report on Form 10-K for the period ended December 31, 2003 (the “2003 Annual Report”), the FASB issued FIN 46R in December 2003. The effect of FIN 46R on the Company is to require that Countrywide no longer include certain subsidiary trusts in its consolidated reporting group. Specifically, the Company now excludes the subsidiary trusts that have issued trust-preferred securities backed by junior subordinated debentures issued by CHL and the Company from the Company’s consolidated financial statements. Terms of the trust-preferred securities are detailed in Note 18 of the 2003 Annual Report.

As a result of the Company’s adoption of FIN 46R, the company-obligated capital securities of subsidiary trusts are no longer reflected on Countrywide’s consolidated balance sheets, but have been replaced on the Company’s balance sheet by the junior subordinated debentures issued to the subsidiary trusts by CHL and the Company.

The Company guarantees CHL’s indebtedness to two of the subsidiary trusts, Countrywide Capital I and Countrywide Capital III. Following is summarized information for those trusts:

The Company has issued zero-coupon Liquid Yield Option Notes (“LYONs”) with an aggregate face value of $675 million, or $1,000 per note, due upon maturity on February 8, 2031. The LYONs were issued at a discount to yield 1.0% to maturity, or 8.25% to the first call date. The LYONs are senior indebtedness of the Company.

Holders of LYONs may require the Company to repurchase all or a portion of their LYONs at the original issue price plus accrued original issue discount. The Company may pay the purchase price in cash, common stock or a combination thereof.

Beginning on February 8, 2006, and on any date thereafter, the Company may redeem the LYONs at the original issue price plus accrued original issue discount.

In the calendar quarter subsequent to March 31, 2004, holders may surrender LYONs for conversion into shares of the Company’s common stock. Holders of LYONs may also surrender shares in any subsequent calendar quarter if the conversion contingency requirements of the LYONs continue to be met. Such requirements are met if, as of the last day of the preceding calendar quarter, the closing sale price of the Company’s common stock, for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of such preceding calendar quarter, is more than a specified percentage of the accreted conversion price per share of common stock on the last day of trading of such preceding calendar quarter (the “Contingent Conversion Stock Price”), with such Contingent Conversion Stock Price to be adjusted for the effect of any stock split declared by the Company. At March 31, 2004, the accreted conversion price per share of common stock was $33.06. The specified percentage of such accreted conversion price applicable for such period was 132.69%. Therefore, the Contingent Conversion Stock Price of the LYONs was $43.87. If the conversion contingency requirements of the LYONs have been met, holders may surrender LYONs for conversion into 23.14 shares of the Company’s common stock per LYON.

The following table shows comparative deposits as of March 31, 2004 and December 31, 2003.

The primary market risk facing the Company is interest rate risk. The most predominate type of interest rate risk at Countrywide is price risk, which is the risk that the value of our assets or liabilities will change due to changes in interest rates. To a lesser extent, interest rate risk also includes the risk that the net interest income from our mortgage loan and investment portfolios will change in response to changes in interest rates. From an enterprise perspective, the Company manages this risk through the natural counterbalance of its loan production and servicing businesses along with various financial instruments, including derivatives, which are used to manage the interest rate risk related specifically to its committed pipeline, mortgage loan inventory and MBS held for sale, MSRs, trading securities and other retained interests, as well as a portion of its debt. The overall objective of the Company’s interest rate risk management activities is to reduce the variability of earnings caused by changes in interest rates.

The Company uses a variety of derivative financial instruments to manage interest rate risk. These instruments include MBS mandatory forward sale and purchase commitments, options to sell or buy MBS, Treasury and Eurodollar rate futures and options thereon, interest rate floors, interest rate caps, capped swaps, swaptions, and interest rate swaps. These instruments involve, to varying degrees, elements of interest rate and credit risk. The Company manages foreign currency exchange rate risk, which arises from the issuance of foreign currency-denominated debt, with foreign currency swaps.

Risk Management Activities Related to Mortgage Loan Inventory and Interest Rate Lock Commitments

The Company has interest rate risk relative to its mortgage loan inventory and its Interest Rate Lock Commitments (“IRLCs”).

The Company is exposed to price risk from the time an IRLC is made to a mortgage applicant (or financial intermediary) to the time the related mortgage loan is sold. During this period, the Company is exposed to losses if mortgage rates rise, because the value of the IRLC or mortgage loan declines. To manage this price risk, the Company utilizes derivatives, primarily forward sales of MBS and options to buy and sell MBS, as well as options on Treasury futures contracts. Certain of these transactions qualify as “fair value” hedges under SFAS 133.

In general, the risk management activities connected with 77% or more of the fixed-rate mortgage inventory is accounted for as a “fair value” hedge. The Company recognized pre-tax losses of $20.8 million and pre-tax gains of $15.4 million, representing the ineffective portion of such fair value hedges of its mortgage inventory, for the quarter ended March 31, 2004 and 2003, respectively. These amounts, along with the change in the fair value of the derivative instruments that were not designated as hedge instruments, are included in gain on sale of loans and securities in the statement of earnings.

IRLCs are derivative instruments and are recorded at fair value with changes in fair value recognized in current period earnings (as a component of gain on sale of loans and securities). Because IRLCs are derivatives under SFAS 133, the risk management activities related to the IRLCs do not qualify for hedge accounting under SFAS 133. The “freestanding” derivative instruments that are used to manage the interest rate risk associated with the IRLCs are marked to fair value and recorded as a component of gain on sale of loans in the consolidated statements of earnings.

Risk Management Activities Related to Mortgage Servicing Rights (MSRs) and Other Retained Interests

MSRs and other retained interests, specifically interest-only securities and residual securities, are generally subject to a loss in value, or impairment, when mortgage interest rates decline. To moderate the effect of impairment on earnings, the Company maintains a portfolio of financial instruments, including derivatives, which increase in aggregate value when interest rates decline. This portfolio of financial instruments is collectively referred to as the “Servicing Hedge.” During the quarters ended March 31, 2004 and 2003, none of the derivative instruments included in the Servicing Hedge were designated as hedges under SFAS 133. The change in fair value of these derivative instruments was recorded in current period earnings as a component of Servicing Hedge gains and losses.

The financial instruments that comprise the Servicing Hedge include options on interest rate futures and MBS, interest rate swaptions, interest rate floors, interest rate caps, interest rate swaps, interest rate futures, Treasury securities and principal-only securities. With respect to the interest rate floors, options on interest rate futures and MBS, interest rate caps and swaptions, the Company is not exposed to loss beyond its initial outlay to acquire the hedge instruments plus any unrealized gains recognized to date. With respect to the interest rate swap contracts and interest rate futures contracts outstanding as of March 31, 2004, the Company estimates that its maximum exposure to loss over the various contractual terms are $1.1 billion and $715 million, respectively. The Company derives its estimates of loss exposure based upon observed volatilities in the interest rate options market. Using the currently observed volatilities, Management estimates, to a 95% confidence level, the maximum potential rate changes over a one-year time horizon. Management then estimates the Company’s exposure to loss based on the estimated maximum adverse rate change as of the measurement date.

The Company enters into interest rate swap contracts which enable it to convert a portion of its fixed-rate, long-term debt to U.S. dollar LIBOR-based floating-rate debt and to enable the Company to convert a portion of its foreign currency-denominated fixed-rate, long-term debt to U.S. dollar LIBOR-based floating-rate debt. These transactions are designed as “fair value” hedges under SFAS 133. For the quarter ended March 31, 2004, the Company recognized a pre-tax loss of $1.2 million, representing the ineffective portion of such fair value hedges of debt. For the quarter ended March 31, 2003, the Company recognized a pre-tax gain of $0.1 million, representing the ineffective portion of such fair value hedges of debt. These amounts are included in interest charges in the consolidated statements of earnings.

In addition, the Company enters into interest rate swap contracts which enable it to convert a portion of its floating-rate, long-term debt to fixed-rate, long-term debt and to convert a portion of its foreign currency-denominated, fixed-rate, long-term debt to U.S. dollar fixed-rate debt. These transactions are designed as “cash flow” hedges. For the quarter ended March 31, 2004 and 2003, the Company recognized pre-tax losses of $0.03 million and $0.1 million, respectively, representing the ineffective portion of such cash flow hedges. As of March 31, 2004, deferred net gains or losses on derivative instruments included in other comprehensive income that are expected to be reclassified as earnings during the next 12 months are not material.

Risk Management Activities Related to the Broker-Dealer Securities Trading Portfolio

In connection with its broker-dealer activities, the Company maintains a trading portfolio of fixed income securities, primarily MBS. The Company is exposed to price changes in its trading portfolio arising from interest rate changes during the period it holds the securities. To manage this risk, the Company utilizes derivative financial instruments. These instruments include MBS mandatory forward sale and purchase commitments as well as short sales of cash market U.S. Treasury securities, futures contracts, interest rate swap contracts, and swaptions. All such derivatives are accounted for as “free-standing” and as such are carried at fair value with changes in fair value recorded in current period earnings as a component of gain on sale of loans and securities.

The Company has five business segments — Mortgage Banking, Capital Markets, Banking, Insurance, and Global Operations.

The Mortgage Banking Segment is comprised of three distinct sectors: Loan Production, Loan Servicing, and Loan Closing Services.

The Loan Production Sector of the Mortgage Banking Segment originates prime and subprime mortgage loans through a variety of channels on a national scale. Through the Company’s retail branch network, which consists of the Consumer Markets Division and Full Spectrum Lending, Inc., the Company sources mortgage loans directly from consumers, as well as through real estate agents and home builders. The Wholesale Lending Division sources mortgage loans primarily from mortgage brokers. The Correspondent Lending Division acquires mortgage loans from other financial institutions. The Loan Servicing Sector of the Mortgage Banking Segment includes investments in MSRs and other retained interests, as well as the Company’s loan servicing operations and subservicing for other domestic financial institutions. The Loan Closing Services Sector of the Mortgage Banking Segment is comprised of the LandSafe companies, which provide credit reports, appraisals, title reports and flood determinations to the Company’s Loan Production Sector, as well as to third parties.

The Capital Markets Segment primarily includes the operations of Countrywide Securities Corporation, a registered broker-dealer specializing in the mortgage securities market. In addition, it includes the operations of Countrywide Asset Management Corporation, Countrywide Servicing Exchange and CCM International Ltd.

The Banking Segment’s operations are primarily comprised of Treasury Bank, National Association (“Treasury Bank” or the “Bank”), and of Countrywide Warehouse Lending. Treasury Bank invests primarily in mortgage loans sourced from the Loan Production Sector. Countrywide Warehouse Lending provides temporary financing secured by mortgage loans to third-party mortgage bankers.

The Insurance Segment activities include Balboa Life and Casualty Group, a national provider of property, life, and liability insurance; Balboa Reinsurance Company, a primary mortgage reinsurance company; and Countrywide Insurance Services, Inc., a national insurance agency offering a specialized menu of insurance products directly to consumers.

The Global Operations Segment includes Global Home Loans Limited, a provider of loan origination processing and servicing in the United Kingdom; UK Valuation Limited, a provider of property valuation services in the UK; and Countrywide International Technology Holdings Limited, a licensor of loan origination processing, servicing, and residential real estate value assessment technology.

In general, intercompany transactions are recorded on an arm’s-length basis. However, the rate at which the Bank reimburses CHL for origination costs incurred on mortgage loans funded by the Bank is determined on an incremental cost basis, which is less than the rate that the Bank would pay to third parties.

Included in the tables below labeled “Other” are the holding company activities and certain reclassifications to conform management reporting to the consolidated financial statements:

In connection with the acquisition of Treasury Bank, CFC became a bank holding company. As a result, the Company is subject to regulatory capital requirements imposed by the Board of Governors of the Federal Reserve System. The Company is also subject to U.S. Department of Housing and Urban Development, Fannie Mae, Freddie Mac and Government National Mortgage Association net worth requirements.

Regulatory capital is assessed for adequacy by three measures: Tier 1 Leverage Capital, Tier 1 Risk-Based Capital and Total Risk-Based Capital. Tier 1 Leverage Capital includes common shareholders’ equity, preferred stock and capital securities that meet certain guidelines detailed in the capital regulations, less goodwill, the portion of MSRs not includable in regulatory capital (generally, the carrying value of MSRs in excess of Tier 1 Capital, net of associated deferred taxes) and other adjustments. Tier 1 Leverage Capital is measured with respect to average assets during the quarter. The Company is required to have a Tier 1 Leverage Capital ratio of 4.0% to be considered adequately capitalized and 5.0% to be considered well capitalized.

The Tier 1 Risk-Based Capital ratio is calculated as a percent of risk-weighted assets at the end of the quarter. The Company is required to have a Tier 1 Risk-Based Capital ratio of 4.0% to be considered adequately capitalized and 6.0% to be considered well capitalized.

Total Risk-Based Capital includes preferred stock and capital securities excluded from Tier 1 Capital, mandatory convertible debt, and subordinated debt that meets certain regulatory criteria. The Total Risk-Based Capital ratio is calculated as a percent of risk-weighted assets at the end of the quarter. The Company is required to have a Total Risk-Based Capital ratio of 8.0% to be considered adequately capitalized and 10.0% to be considered well capitalized.

The following table presents the actual capital ratios and amounts, and minimum required capital ratios for the Company to maintain a “well-capitalized” status by the Board of Governors of the Federal Reserve System at March 31, 2004 and at December 31, 2003:

The Company and certain subsidiaries are defendants in, or parties to, a number of pending and threatened legal actions and proceedings involving matters that are generally incidental to their business. These matters include actions and proceedings involving alleged breaches of contract, violations of consumer protection and other laws and regulations, and other disputes arising out of the Company’s operations. Certain of these matters involve claims for substantial monetary damages, and others purport to be class actions.

Based on its current knowledge, Management does not believe that liabilities, if any, arising from any single pending action or proceeding will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company and its subsidiaries. The Company is not, however, able to predict with certainty the outcome or timing of the resolution of any of these actions or proceedings or the ultimate impact on the Company or its results of operations in a particular future period.

On April 20, 2004, the Company’s Board of Directors declared a dividend of $0.15 per common share, payable June 1, 2004 to shareholders of record on May 13, 2004.

Summarized financial information for Countrywide Financial Corporation and subsidiaries is as follows:

In March 2004, the Emerging Issues Task Force of the FASB reached consensus opinions regarding the determination of whether an investment is considered impaired, whether the identified impairment is considered other-than-temporary, how to measure other-than-temporary impairment, and how to disclose unrealized losses on investments that are not other-than-temporarily impaired. The consensus opinions, detailed in Emerging Issues Task Force Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments,” add to the Company’s impairment assessment requirements detailed in Emerging Issues Task Force Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased and Retained Interests in Securitized Financial Assets.” The new measurement requirements are

applicable to Countrywide’s Quarterly Report for the quarter ending June 30, 2004. The Company has included the new disclosure requirements in its 2003 Annual Report and in this Quarterly Report.

The effect of this pronouncement on Countrywide will be to require management to include in its assessment of impairment of securities classified as available-for-sale whether the Company has the ability and intent to hold the investment for a reasonable period of time sufficient for the fair value of the security to recover, and whether evidence supporting the recoverability of the Company’s investment within a reasonable period of time outweighs evidence to the contrary. Management does not expect the implementation of these consensuses to have a significant impact on the Company’s financial condition or earnings.

This Quarterly Report on Form 10-Q represents an update to the more detailed and comprehensive disclosures included in our Annual Report on Form 10-K for the year ended December 31, 2003. As such, a reading of the Annual Report on Form 10-K is necessary to an informed understanding of the following discussions.

In April 2004, we completed a 3-for-2 stock split effected as a stock dividend. All references in the accompanying Management’s Discussion and Analysis of Financial Condition and Results of Operations to the number of common shares and earnings per share amounts have been adjusted accordingly.

Countrywide’s core business is residential mortgage banking. In recent years, we have expanded from our core mortgage banking business into related businesses. We have pursued this diversification to capitalize on meaningful opportunities to leverage our core mortgage banking business and to provide sources of earnings that are less cyclical than the mortgage banking business. We manage these businesses through five business segments — Mortgage Banking, Capital Markets, Banking, Insurance and Global Operations.

The mortgage banking business continues to be the primary source of our revenues and earnings. As a result, the primary influence on our operating results is the aggregate demand for mortgage loans in the U.S., which is affected by such external factors as prevailing mortgage rates and the strength of the U.S. housing market.

Total U.S. residential mortgage loan originations were approximately $585 billion in the quarter ended March 31, 2004, a decrease of approximately $290 billion, or 33%, from the year-ago period (Source: Inside Mortgage Finance). During this same time period our production volume decreased 26%. In spite of the decline in production in the quarter ended March 31, 2004 from the year-ago quarter, the pre-tax earnings in our Mortgage Banking segment increased 126%. This was primarily the result of a reduction in net MSR impairment in the servicing sector combined with a significant increase in production sector margins driven by increased sales of subprime and home equity loans. Earnings from our related businesses also increased. As a result, our net earnings reached $691.0 million in the quarter ended March 31, 2004, an increase of $364.7 million, or 112%, from the year-ago period.

For 2004, forecasters predict a substantial reduction in total U.S. mortgage production, due to an expected decline in mortgage refinance activity in comparison to 2003. We believe that a market within the forecasted range would still be favorable for our loan production business, although we would expect increased competitive pressures to have some impact on the profitability of that business. A reduction in mortgage refinance activity should result, however, in an increase in profitability from our investment in mortgage servicing rights. A decline in mortgage production would likely result in a reduction in mortgage securities trading and underwriting volume, which may negatively impact the profitability of our Capital Markets Segment. However, we expect earnings in our Banking Segment to increase, primarily as a result of growth in its mortgage loan portfolio. As a result of declining interest rates during the quarter ended March 31, 2004, the pipeline of loans in process at March 31, 2004 increased by 74% to $57.4 billion compared to $33.0 billion at December 31, 2003. A large pipeline of loans in process is a leading indicator of strong funding performance in the short term.

The principal market risk we face is interest rate risk — the risk that the value of our assets or liabilities or our net interest income will change due to changes in interest rates. We manage this risk primarily through the natural counterbalance of our loan production operations and our investment in mortgage servicing rights, as well as through the use of various financial instruments including derivatives. The overall objective of our interest rate risk management activities is to reduce the variability of earnings caused by changes in interest rates.

We also face credit risk, primarily related to our residential mortgage production activities. Credit risk is the potential for financial loss resulting from the failure of a mortgagor or an institution to honor its contractual obligations to us. We manage mortgage credit risk principally by securitizing substantially all mortgage loans that we produce, and by only retaining high credit quality mortgages in our loan portfolio.

Our liquidity and financing requirements are significant. We meet these requirements in a variety of ways including use of the public corporate debt and equity markets, mortgage and asset-backed securities markets, and through the financing activities of our bank. The objective of our liquidity management is to ensure that sufficient diverse and reliable sources of cash are available to meet our funding needs on a cost-effective basis. Our ability to raise financing at the level and cost required to compete effectively is dependent on maintaining our high credit standing, which is evidenced primarily by our credit ratings.

The mortgage industry has undergone rapid consolidation in recent years and we expect this trend to continue in the future. Today the industry is dominated by large, sophisticated financial institutions. To compete effectively in the future, we will be required to maintain a high level of operational, technological and managerial expertise, as well as an ability to attract capital at a competitive cost. We believe that we will benefit from industry consolidation through increased market share and more rational price competition.

Countrywide is a diversified financial services company, with mortgage banking at its core. Our goal is to be the leader in the mortgage banking business in the future. We plan to leverage our position in mortgage banking to grow our related businesses.

The accounting policies that have the greatest impact on our financial condition and results of operations and that require the most judgment are those relating to our mortgage securitization activities and the ongoing valuation of retained interests, particularly Mortgage Servicing Rights (“MSRs”), that arise from those activities, as well as our interest rate risk management activities. Our critical accounting policies involve accounting for gains on sales of loans and securities, the valuation of MSRs and other retained interests, and accounting for our derivatives and interest rate risk management activities. These policies are described in further detail in our Annual Report on Form 10-K for the year ended December 31, 2003.

Our diluted earnings per share for the quarter ended March 31, 2004 was $2.22, an 82% increase over diluted earnings per share for the quarter ended March 31, 2003. Net earnings were $691.0 million, an 112% increase from the quarter ended March 31, 2003. This earnings performance was driven primarily by significantly reduced losses from our MSRs combined with increased production margins driven primarily by an increase in sales of subprime and home equity loans during the period.

Industry-wide, residential mortgage originations were approximately $585 billion during the first quarter of 2004, down from approximately $875 billion in the first quarter of 2003 (Source: Inside Mortgage Finance). Approximately 58% of the residential mortgages produced in the first quarter of 2004 were refinancing transactions triggered primarily by continued low mortgage rates. The balance of mortgages produced related to home purchases.

The decreased demand for mortgages resulted in lower production volumes in the quarter ended March 31, 2004. Increased sales of high-margin subprime and home equity loans bolstered the Loan Production sector margin and enabled us to realize pre-tax earnings of $941.9 million for the quarter, an increase of $59.6 million from the year-ago period.

The pre-tax loss in the Servicing Sector, which incorporates the performance of our MSRs and other retained interests, was $158.2 million, an improvement of $395.8 million over the year-ago period. This decrease in pre-tax loss was primarily attributable to the combined amount of amortization and impairment,

net of Servicing Hedge gains, totaling $736.5 million in the current quarter, as compared to $1,018.6 million in the year-ago period.

These sectors combined to produce pre-tax earnings of $802.2 million in the Mortgage Banking Segment for the quarter ended March 31, 2004, an increase of 126% from the quarter ended March 31, 2003.

Our non-mortgage banking businesses also were significant contributors to the earnings performance in the quarter ended March 31, 2004. In particular, our Capital Markets Segment recorded pre-tax earnings of $153.2 million, as compared to $96.1 million in the year-ago period. This segment’s results in the current period were bolstered by increased revenues from its mortgage conduit activities. In addition, our Banking Segment increased its pre-tax earnings by $62.3 million over the year ago quarter, driven primarily by growth in mortgage loans in Treasury Bank. In total, non-mortgage banking businesses contributed $321.8 million in pre-tax earnings for the quarter ended March 31, 2004, an increase of 89% from the year-ago period.

The Mortgage Banking Segment includes the Loan Production, Loan Servicing and Loan Closing Services Sectors.

The Loan Production Sector produces mortgage loans through the three production divisions of Countrywide Home Loans, (“CHL”) — Consumer Markets, Wholesale Lending and Correspondent Lending, as well as through Full Spectrum Lending, Inc. (“FSLI”).

Decreased demand for residential mortgages resulted in lower production volume in the quarter ended March 31, 2004 compared to the year-ago period. The reduction in total U.S. mortgage loan production was partially offset by an increase in our market share from the year ago period. Our mortgage loan production market share was 13% in the quarter ended March 31, 2004, up from 12% in the quarter ended March 31, 2003 (Source: Inside Mortgage Finance).

Revenues increased over the year ago period due to increased sales of subprime and home equity loans. Combined sales of these products were $12.4 billion in the current quarter compared to $1.2 billion in the year-ago quarter. The associated increase in revenues was approximately $585.8 million. Revenues from sales of prime loans decreased by approximately $618.7 million, in line with the reduction in loans produced.

Operating expenses increased over the year-ago period due to a planned reduction in productivity to sustainable levels as well as to a shift in the divisional mix of production towards more retail production and less correspondent production.

The following table shows total Mortgage Banking loan production volume by division:

Mortgage Banking loan production for the quarter ended March 31, 2004 decreased 30% in comparison to the year-ago period. The decrease was due primarily to a decline in non-purchase loan production of 47% partly offset by an increase in purchase production of 26%. The increase in purchase loans is significant because this is the relatively stable growth component of the mortgage market, with average annual growth of 10% over the last 10 years. (The non-purchase, or refinance, component of the mortgage market is highly volatile because it is driven almost exclusively by prevailing mortgage rates.)

The following table summarizes Mortgage Banking loan production by purpose and by interest rate type:

The volume of Mortgage Banking Prime Home Equity and Subprime Mortgage Loans produced (which is included in our total volume of loans produced) increased 96% during the current period from the prior period. Details are shown in the following table.

Prime Home Equity and Subprime Mortgage Loans carry higher profit margins historically, and the demand for such loans is believed to be less rate sensitive than the demand for prime home mortgage loans. Consequently, Management believes these loans will be a significant component of the sector’s future growth, in particular if mortgage rates should rise significantly.

During the quarter ended March 31, 2004, the Loan Production Sector operated at approximately 106% of planned operational capacity, compared to 116% during the year-ago period. The primary capacity constraint in our loan origination activities is the number of loan operations personnel we have on staff. Therefore, we measure planned capacity with reference to the number of our loan operations personnel multiplied by the number of loans we expect each loan operations staff person to process under normal conditions. From its peak in the third quarter of 2003, the total number of operations personnel has been reduced by approximately 2,500. Concurrent with this reduction in operations personnel has been a reduction in productivity to more sustainable levels that will result in higher overall unit costs. We plan to continue building our sales staff despite any potential further drop in loan origination volume as a primary means to increase our market share.

The Consumer Markets Division continued to grow its commissioned sales force during the period. At March 31, 2004, the commissioned sales force numbered 3,694, an increase of 950 compared to the year ago period. The primary focus of the commissioned sales force is to increase overall purchase market share. The commissioned sales force contributed $6.4 billion in purchase originations during the quarter ended March 31, 2004, a 59% increase over the year-ago period. The purchase production generated by the commissioned sales force represented 75% of the Consumer Markets Division’s purchase production for the quarter ended March 31, 2004.

Like the Consumer Markets Division, the Wholesale Lending Division and FSLI continued to grow their sales forces as a core strategy to increase market share. At March 31, 2004, the sales force in the Wholesale Lending Division numbered 918, an increase of 4% during the quarter. FSLI expanded its sales force by 436, or 22%, during the quarter.

The Loan Servicing Sector reflects the performance of our investments in MSRs and other retained interests and associated risk management activities, as well as profits from sub-servicing activities in the United States. The Loan Servicing Sector includes a significant processing operation, consisting of approximately 5,800 employees who service our 5.3 million mortgage customers. How effectively this servicing operation manages costs and generates ancillary income from the portfolio has a significant impact on the long-term performance of this sector.

The Loan Servicing Sector experienced a pre-tax loss of $158.2 million during the recent period, driven by high amortization and impairment of our retained interests. The amortization and impairment charges reflect the loss in value of our retained interests, which was primarily due to the high level of actual and projected prepayments in our mortgage servicing portfolio. In general, the value of the MSRs and other retained interests is closely linked to the estimated life of the underlying loans, which decreased during both quarters due to the decrease in mortgage rates. The combined amortization and impairment charge was $1,409.3 million and $1,024.9 million during the quarter ended March 31, 2004 and 2003, respectively.

During the quarter ended March 31, 2004, the Servicing Hedge generated a gain of $672.8 million. This gain resulted from a decrease in long-term Treasury and swap rates, which indices underlie the derivatives and securities that constitute the primary component of the Servicing Hedge. Amortization and impairment, net of the Servicing Hedge, was $736.5 million for the quarter ended March 31, 2004, a decrease of $282.0 million over the quarter ended March 31, 2003. In a stable interest rate environment, Management would expect no significant impairment and would expect to incur expenses related to the Servicing Hedge driven primarily by time decay on options used in the hedge, which in turn depend on various factors such as the size and composition of the hedge, the shape of the yield curve and the level of implied interest rate volatility.

Despite the high level of prepayments, we increased our servicing portfolio to $682.8 billion at March 31, 2004, a 36% increase from March 31, 2003. At the same time, the overall weighted-average note rate of loans in our servicing portfolio declined from 6.6% to 6.0%.

The LandSafe companies produced $18.5 million in pre-tax earnings, representing a decrease of 29% from the year-ago period. The decrease in LandSafe’s pre-tax earnings was primarily due to the decrease in our loan origination activity.

To leverage our mortgage banking platform, as well as to reduce the variability of earnings due to changes in mortgage interest rates, we have expanded into other financial services. These other businesses are grouped into the following segments: Capital Markets, Banking, Insurance, and Global Operations.

Our Capital Markets Segment achieved pre-tax earnings of $153.2 million for the quarter, an increase of $57.0 million, or 59%, from the year-ago period. Total revenues were $223.4 million, an increase of $60.8 million, or 37% compared to the year-ago period. This segment’s performance continues to be driven by a highly favorable operating environment consisting of a robust mortgage securities market, high mortgage securities price volatility, and low short-term financing costs.

During the quarter ended March 31, 2004, the Capital Markets Segment generated revenues totaling $107.3 million from its conduit activities, which include brokering and managing the acquisition, sale or securitization of whole loans on behalf of CHL. Conduit revenues for the quarter ended March 31, 2004 increased 69% in comparison to the year-ago period primarily as a result of an increase in the average inventory of conduit loans held combined with an increase in mortgage sales.

Underwriting revenues increased $26.9 million over the year-ago period primarily as a result of increased sales of our subprime and home equity securities during the period.

Trading revenues declined 18% due to a 12% decline in trading volume, excluding trading of U.S. Treasury securities. Including U.S. Treasury securities, the total securities volume traded increased 8% over the year-ago period. Effective January 15, 2004, CSC became a “Primary Dealer” and as such is an authorized counterparty with the Federal Reserve Bank of New York in its open market operations. As a result of this new status, trading activities associated with U.S. Treasury Securities are expected to begin generating meaningful revenues in the second half of 2004.

The following table shows the composition of Countrywide Securities Corporation (“CSC”) securities trading volume, which includes intersegment trades with the mortgage banking operations, by instrument:


(1)	Approximately 11% and 12% of the segment’s total securities trading volume was with CHL during the quarter ended March 31, 2004 and 2003, respectively.

In the quarter ended March 31, 2004, underwriting revenues totaled $63.3 million, an increase of 74% compared to the year ago period. This increase was attributable to an 80% increase in underwriting volume from the year ago period. The increase in underwriting volume was due primarily to increased securitizations by the mortgage banking segment.

The Banking Segment achieved pre-tax earnings of $105.6 million during the quarter ended March 31, 2004, as compared to $43.3 million for the year-ago period. Following is the composition of pre-tax earnings by company:

The components of net interest income before provision for loan losses are summarized below:

The increase in net interest income before allowance for loan losses is primarily due to a $14.1 billion increase in average interest-earning assets, primarily mortgage loans, combined with an increase in net interest margin of 22 basis-points. The yield on interest-earning assets increased by 50 basis points due largely to a shift in the mix of the Bank’s earning assets towards mortgage loans held for investment. The cost of interest-bearing liabilities increased due to the change in the mix of the Bank’s liabilities arising from Treasury Bank taking advantage of the availability of FHLB advances.

The Banking Segment also includes the operation of CWL. CWL’s pre-tax earnings decreased by $2.5 million during the quarter ended March 31, 2004 in comparison to the year-ago period, primarily due to a 25% decline in average mortgage warehouse advances. The decline in average mortgage warehouse advances was attributable to a decline in the overall mortgage originations market.

The Insurance Segment pre-tax earnings increased 110% over the year-ago period, to $52.0 million. The following table shows pre-tax earnings by business line:


(1)	Includes the Balboa Life and Casualty Group and the Countrywide Insurance Services Group.

Our mortgage reinsurance business produced $32.8 million in pre-tax earnings, an increase of 71% over the year-ago period, driven primarily by growth of 20% in the mortgage loans included in our loan servicing portfolio that are covered by reinsurance contracts combined with an overall increase in the ceded premium percentage.

Our Life and Casualty insurance business produced pre-tax earnings of $24.0 million, an increase of $15.0 million from the comparable quarter in 2003. The growth in earnings was driven by a $14.8 million, or 10%, increase in net earned premiums during the quarter ended March 31, 2004 in comparison to the year-ago quarter. The growth in net earned premiums was primarily attributable to growth in lender-placed insurance.

Global Operations pre-tax earnings totaled $11.7 million, an increase of $5.9 million in comparison to the year-ago period. The increase in earnings was due to growth in the portfolio of mortgage loans subserviced and the number of new mortgage loans processed on behalf of Global Home Loan’s minority joint venture partner, Barclays plc.

Gain on sale of loans and securities is summarized below for the quarters ended March 31, 2004 and 2003:

Gain on sale of Prime Mortgage Loans decreased in the quarter ended March 31, 2004 as compared to the quarter ended March 31, 2003 due primarily to lower Prime Mortgage Loan production and sales combined with lower margins. This reduction in gain on sale revenues was partially offset by increased net interest income associated with Prime Mortgage Loans. Gain on sale of Home Equity and Subprime Mortgage Loans increased in the quarter ended March 31, 2004 compared to quarter ended March 31, 2003 due primarily to increased sales of these loans. Inventory of these high-margin products had been accumulated during recent periods of high origination volume. A portion of the inventory was sold in the quarter ended March 31, 2004 to capitalize on favorable market conditions and to partly offset MSR impairment that incurred during the period.

Reperforming loans are reinstated loans that had previously defaulted and were consequently repurchased from mortgage securities we issued. The increase in gain on sale of reperforming loans is due to an increase in the volume of loans sold. The note rate on these loans is typically higher than the current mortgage rate, and therefore, the margin on these loans is typically higher than margins on Prime Mortgage Loans.

Capital Markets’ revenues from its trading activities consist of gains on the sale of securities and net interest income. In a very steep yield curve environment, which existed during both periods, trading revenues will derive largely or entirely from net interest income earned during the securities’ holding period. As the yield curve flattens, the mix of revenues shifts toward gain on sale of securities. The increase in Capital Markets’ gain on sale of loans related to its conduit activities was due to increased acquisitions and sales during the quarter ended March 31, 2004 in comparison to the year-ago period.

In general, gain on sale of loans and securities is affected by numerous factors, including the volume and mix of loans sold, production channel mix, the level of price competition, the slope of the yield curve, and the effectiveness of our associated interest rate risk management activities.

Net interest income is summarized below for the quarters ended March 31, 2004 and 2003:

The increase in net interest income from mortgage loans and securities held for sale reflects an increase in the average mortgage inventory resulting from an increase in the average period loans were held in inventory during the quarter ended March 31, 2004 as compared to the quarter ended March 31, 2003. The increase in net interest income was partially offset by a reduction in gain on sale of Prime Mortgage Loans.

Net interest expense from custodial balances decreased in the current period due to the decrease in loan payoffs from the year-ago period. We are obligated to pass through monthly interest to security holders on paid-off loans at the underlying security rates, which were substantially higher than the short-term rates earned by us on the payoff float. The amount of such interest passed through to the security holders was $68.0 million and $89.5 million in the quarters ended March 31, 2004 and 2003, respectively. The decline in

interest on loan payoffs was partially offset by a decline in average custodial balances of $1.4 billion, or 9%, over the prior period, due largely to the decrease in loan payoffs. In addition, the earnings rate on the custodial balances declined from 1.21% during the quarter ended March 31, 2003 to 0.82% during the quarter ended March 31, 2004.

Interest expense allocated to the Loan Servicing Sector increased due to an increase in total sector assets.

The increase in net interest income from the Capital Markets securities trading portfolio is attributable to an increase of 63% in the average inventory of securities held, partially offset by a decrease in the average net spread earned from 3.61% in the quarter ended March 31, 2003 to 2.89% in the quarter ended March 31, 2004.

The increase in net interest income from the Banking Segment was primarily attributable to growth in mortgage loans in the Bank. Average assets in the Banking Segment increased to $23.6 billion during the quarter, an increase of $13.1 billion over the year-ago quarter. The average net spread earned increased to 2.2% during the quarter March 31, 2004 from 1.9% during the quarter ended March 31, 2003.

Reperforming loans are reinstated loans that had previously defaulted and were consequently repurchased from mortgage securities issued by Countrywide or others. Such loans are subsequently securitized and resold. The decrease in interest income related to this activity is a result of a decrease in the average balance of such loans held.

Loan servicing fees and other income from retained interests are summarized below for the quarters ended March 31, 2004 and 2003:

The increase in servicing fees, net of guarantee fees, was principally due to a 40% increase in the average servicing portfolio, partially offset by a reduction in the overall annualized net service fee earned from 0.36% of the average portfolio balance during the quarter ended March 31, 2003 to 0.34% during the quarter ended March 31, 2004. The reduction in the overall net service fee was largely due to the securitization of excess service fees.

The increase in income from other retained interests was due primarily to a 3% increase in investment balances during the quarter ended March 31, 2004 combined with an increase in the average effective yield of these investments from 20% in the quarter ended March 31, 2003 to 21% in the quarter ended March 31, 2004. These investments include interest-only and principal-only securities as well as residual interests that arise from the securitization of nonconforming mortgage loans, particularly subprime and home equity loans.

Higher prepayment penalty income in the quarter ended March 31, 2004 corresponded to the increase in subprime loan payoffs during the quarter.

The increase in subservicing fees earned in the Global Operations Segment was primarily due to growth in the portfolio subserviced. The Global Operations subservicing portfolio was $111 billion and $91 billion at March 31, 2004 and 2003, respectively.

We recorded amortization of MSRs of $413.7 million during the quarter ended March 31, 2004 as compared to $362.5 million during the quarter ended March 31, 2003. The increase in amortization of MSRs was primarily due to an increase in the cost basis of the MSRs attributable to growth in our servicing portfolio. The MSR amortization rate was 19.9% for the quarter ended March 31, 2004 as compared to 18.7% for the quarter ended March 31, 2003.

Impairment of retained interests and Servicing Hedge gains are detailed below for the quarters ended March 31, 2004 and 2003:

The impairment of MSRs and other retained interests during the quarter ended March 31, 2004 resulted from a decrease in the estimated fair value of those investments driven by a decrease in mortgage rates during the quarter. A small decline in mortgage rates combined with an increase in estimated market required yields during the quarter ended March 31, 2003, resulted in MSR impairment of $662.4 million.

Rising mortgage rates in the future should result in an increase in the estimated fair value of the MSRs and recovery of all or a portion of the impairment reserve. The MSR amortization rate, which is tied to the expected net cash flows from the MSRs, likewise should reduce as mortgage rates rise.

During the quarter ended March 31, 2004, long-term Treasury and swap rates decreased, resulting in a Servicing Hedge gain of $672.8 million. During the quarter ended March 31, 2003, the Servicing Hedge generated a gain of $6.4 million as long-term Treasury and swap rates were basically unchanged.

The Servicing Hedge is intended to moderate the effect on earnings caused by changes in the estimated fair value of MSRs and other retained interests that generally result from changes in mortgage rates. Rising interest rates in the future will result in Servicing Hedge losses.

The increase in net insurance premiums earned is primarily due to an increase in lender-placed and voluntary lines of businesses.

Commissions and other income consisted of the following for the quarters ended March 31, 2004 and 2003:

The increase in processing fees earned in the Global Operations Segment was due to growth in the number of loans processed.

The decrease in net appraisal and title services fees is primarily due to the decrease in mortgage loan production.

Compensation expenses are summarized below for the quarters ended March 31, 2004 and 2003:

Compensation expenses increased $100.6 million, or 17%, during the quarter ended March 31, 2004 as compared to the quarter ended March 31, 2003.

Compensation expenses in the Mortgage Banking Segment increased primarily due to growth in the loan production sales force. In the Loan Production Sector, compensation expenses increased $54.1 million, or 17%, as a result of a 19% increase in average staff, primarily the sales force. In the Loan Servicing Sector, compensation expense rose $11.3 million, or 20%, as a result of an increase in average staff of 10% to support a 25% increase in the number of loans serviced.

Incremental direct costs associated with the origination of loans are deferred when incurred. When the related loan is sold, the costs deferred are included as a component of gain on sale. See “Note 2 — Summary of Significant Accounting Policies — Financial Statement Reclassifications” in the December 31, 2003 10-K for a further discussion of deferred origination costs.

Compensation expenses increased in all other business segments and corporate administration reflecting their growth and growth in the Company.

Occupancy and other office expenses for the quarter ended March 31, 2004 increased by $40.3 million or 32%, primarily to accommodate personnel growth in the loan production operations, which accounted for 64% of the increase, as well as in the non-mortgage banking businesses, which accounted for 12% of the increase in this expense.

Insurance claim expenses were $84.7 million, or 43%, of net insurance premiums earned for the quarter ended March 31, 2004, as compared to $88.1 million, or 51%, of net insurance premiums earned for the quarter ended March 31, 2003. Balboa Life and Casualty’s loss ratio (including allocated loss adjustment expenses) decreased from 56% for the quarter ended March 31, 2003 to 51% for the quarter ended March 31, 2004, due to lower claims experience in both voluntary homeowners’ and lender-placed insurance lines. Reinsurance claims expenses are a function of expected remaining losses and premiums. These decreased $2.0 million over the quarter ended March 31, 2003.

Other operating expenses for the quarters ended March 31, 2004 and 2003 are summarized below:

The primary market risk we face is interest rate risk. From an enterprise perspective, the Company manages this risk through the natural counterbalance of its loan production and servicing businesses. The Company also uses various financial instruments, including derivatives, to manage the interest rate risk related specifically to its Committed Pipeline, Mortgage Loan Inventory and Mortgage-Backed Securities held for sale, MSRs and other retained interests, trading securities as well as a portion of its debt. The overall objective of the Company’s interest rate risk management activities is to reduce the variability of earnings caused by changes in interest rates.

We perform various sensitivity analyses that quantify the net financial impact of changes in interest rates on our interest rate-sensitive assets, liabilities and commitments. These analyses incorporate assumed changes in the interest rate environment including selected hypothetical (instantaneous) parallel shifts in the yield curve. Utilizing these analyses, the following table summarizes the estimated change in fair value of our interest rate-sensitive assets, liabilities and commitments as of March 31, 2004, given several hypothetical (instantaneous) parallel shifts in the yield curve:

The following table summarizes the estimated change in fair value of the Company’s interest rate-sensitive assets, liabilities and commitments as of December 31, 2003, given several hypothetical (instantaneous) parallel shifts in the yield curve:

These sensitivity analyses are limited in that they were performed at a particular point in time; are subject to the accuracy of various assumptions used, including prepayment forecasts and discount rates; and do not incorporate other factors that would impact the Company’s overall financial performance in such scenarios, most significantly the impact of changes in loan production earnings that result from changes in interest rates. In addition, not all of the changes in fair value would impact current period earnings. For example, MSRs are carried at the lower of cost or market and impairment reserves are computed by interest rate stratum. Therefore, absent hedge accounting, the increase in the value of the MSRs that is recorded in current period earnings would be limited to recovery of the impairment reserve for each stratum. The total impairment reserve was $1.7 billion at March 31, 2004. For these reasons, the preceding estimates should not be viewed as an earnings forecast.

We occasionally issue medium-term notes denominated in a foreign currency. We manage the foreign currency risk associated with these medium-term notes through currency swap transactions. The terms of the currency swaps effectively translate the medium-term notes into U.S. dollar obligations, thereby eliminating the associated foreign currency risk. As a result, potential changes in the exchange rates of foreign currencies denominating such medium-term notes would not have a net financial impact on future earnings, fair values or cash flows.

Substantially all mortgage loans we produce are securitized and sold into the secondary mortgage market. As described in our Annual Report on Form 10-K for the year ended December 31, 2003, the degree to which credit risk on the underlying loans is transferred through the securitization process depends on the structure of the securitization. Our prime first mortgage loans generally are securitized on a non-recourse basis, while

Prime Home Equity Loans and Subprime Mortgage Loans generally are securitized with limited recourse for credit losses.

Our exposure to credit losses related to our limited recourse securitization activities is limited to the carrying value of our subordinated interests and to the contractual limit of reimbursable losses under our corporate guarantees less the recorded liability for such guarantees. These amounts at March 31, 2004 are as follows:

The carrying value of the residual securities is net of expected future credit losses.

Related to our non-recourse and limited recourse securitization activities, the total credit losses incurred for the three months ended March 31, 2004 and 2003 are summarized as follows:

We provide mortgage reinsurance through contracts with several primary mortgage insurance companies on mortgage loans included in our servicing portfolio. Under these contracts, we absorb mortgage insurance losses in excess of a specified percentage of the principal balance of a given pool of loans, subject to a cap, in exchange for a portion of the pool’s mortgage insurance premium. Approximately $69.2 billion of mortgage loans in our servicing portfolio are covered by such mortgage reinsurance contracts. The reinsurance contracts place limits on our maximum exposure to losses. At March 31, 2004, the maximum aggregate losses under the reinsurance contracts were $407.4 million. We are required to pledge securities to cover this potential liability. For the three months ended March 31, 2004, we did not incur any losses under our reinsurance contracts.

At March 31, 2004, mortgage loans held for sale amounted to $19.4 billion. While the loans are in inventory, we bear credit risk after taking into consideration primary mortgage insurance (which is generally required for conventional loans with a loan-to-value ratio greater than 80%), FHA insurance or VA guarantees. Historically, credit losses related to loans held for sale have not been significant.

We have a growing portfolio, primarily in our bank, of Prime Mortgage and Prime Home Equity Loans held for investment, which amounted to $25.5 billion at March 31, 2004. A portion of the Prime Home Equity Loans held in the bank are covered by a pool insurance policy that provides partial protection against credit losses. Otherwise, we generally retain full credit exposure on these loans. Our allowance for credit losses related to all mortgage loans held for investment amounted to $93.1 million at March 31, 2004.

We also provide short-term secured mortgage loan warehouse advances to various lending institutions, which totaled $2.7 billion at March 31, 2004. We incurred no credit losses related to this activity in the quarter ended March 31, 2004.

We have exposure to credit loss in the event of nonperformance by our trading counterparties and counterparties to our various over-the-counter derivative financial instruments. We manage this credit risk by selecting only well-established, financially strong counterparties, spreading the credit risk among many such counterparties, and by placing contractual limits on the amount of unsecured credit risk from any single counterparty.

The aggregate amount of counterparty credit exposure at March 31, 2004, before and after collateral held by Countrywide, was as follows:

For the three months ended March 31, 2004, the Company incurred no credit losses due to the non-performance of any of its counterparties.

The following table sets forth certain information regarding our servicing portfolio of single-family mortgage loans, including loans and securities held for sale and loans subserviced for others, for the periods indicated.


(1)	Runoff refers to scheduled principal repayments on loans and unscheduled prepayments (partial prepayments or total prepayments due to refinancing, modification, sale, condemnation or foreclosure).

(2)	Excludes subserviced loans and loans purchased at a discount due to their non-performing status and is expressed as a percentage of total number of loans serviced.

We attribute the overall decline in delinquencies in our servicing portfolio primarily to the relative overall increase in the conventional and prime home equity portfolios, which carry lower delinquency rates than the government and subprime portfolios. We believe the delinquency rates in our servicing portfolio are consistent with industry experience for similar mortgage loan portfolios.

We regularly forecast our potential funding needs over a three month horizon, taking into account debt maturities and potential peak balance sheet levels. Available reliable sources of liquidity are appropriately sized to meet potential future funding requirements. We currently have $55.9 billion in reliable sources of short-term liquidity, which represents an increase of $3.4 billion in comparison to December 31, 2003. Management believes we have adequate financing capability to meet our current needs.

At March 31, 2004 and December 31, 2003, our regulatory capital ratios were as follows:

Cash flow provided by operating activities was $3.1 billion for the three months ended March 31, 2004 compared to net cash used in operating activities of $7.3 billion for the three months ended March 31, 2003. The increase in cash flow from operations for the three months ended March 31, 2004 compared to the three months ended March 31, 2003 was primarily due to a $17.1 billion net decrease in cash used to fund Mortgage Loan Inventory, partially offset by a net increase in cash used to fund broker-dealer activity.

Net cash used by investing activities was $2.3 billion for the three months ended March 31, 2004, compared to $5.7 billion for the three months ended March 31, 2003. The decrease in net cash used in investing activities was primarily attributable to a $5.1 billion decrease in cash used to fund available-for-sale securities, offset by a $1.9 billion increase in cash used to fund loans held for investment.

Net cash used by financing activities for the three months ended March 31, 2004 totaled $0.2 billion, compared to net cash provided by financing activities of $12.8 billion for the three months ended March 31, 2003. The decrease in cash used by financing activities was comprised of a $16.2 billion net decrease in short-term (primarily secured) borrowings, offset by a $2.9 billion net increase in long-term debt.

In the ordinary course of our business we engage in financial transactions that are not recorded on our balance sheet. (See Note 2 — “Summary of Significant Accounting Policies” in the December 31, 2003 10-K for a description of our consolidation policy.) Such transactions are structured to manage our interest rate credit or liquidity risks, diversify funding sources or to optimize our capital.

Substantially all of our off-balance sheet arrangements relate to the securitization of mortgage loans. Our mortgage loan securitizations are normally structured as sales, in accordance with SFAS 140, which involves the transfer of the mortgage loans to “qualifying special-purpose entities” that are not subject to consolidation. In a securitization, an entity transferring the assets is able to convert those assets into cash. Special-purpose entities used in such securitizations obtain cash to acquire the assets by issuing securities to investors. In a securitization, we customarily provide representations and warranties with respect to the mortgage loans transferred. In addition, we generally retain the right to service the transferred mortgage loans.

We also generally have the right to repurchase mortgage loans from the special-purpose entity if the remaining outstanding balance of the mortgage loans falls to a level where the cost of servicing the loans exceeds the revenues we earn.

Our prime mortgage loans generally are securitized on a non-recourse basis, while prime home equity and subprime mortgage loans generally are securitized with limited recourse for credit losses. During the three months ended March 31, 2004, we securitized $12.9 billion subprime and home equity loans with limited recourse for credit losses. Our exposure to credit losses related to our limited recourse securitization activities is limited to the carrying value of our subordinated interests and to the contractual limit of reimbursable losses under our corporate guarantees less the recorded liability for such guarantees. For a further discussion of our

exposure to credit risk, see the section in this Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Credit Risk.”

Management does not believe that any of its off-balance sheet arrangements have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

The following table summarizes our significant contractual obligations at March 31, 2004, with the exception of short-term borrowing arrangements and pension and post-retirement benefit plans.

Total United States mortgage originations were estimated at approximately $3.8 trillion for 2003. Forecasters estimate the market for 2004 will be substantially less than the market for 2003. We believe that a market within the forecasted range would be favorable for our loan production business, although we would expect increased competitive pressures to have some impact on its profitability. This forecast would imply lessening pressure on our loan servicing business due to a reduction in mortgage loan prepayment activity. In our capital markets business, such a drop in mortgage originations would likely result in a reduction in mortgage securities trading and underwriting volume, which would have a negative impact on its profitability.

According to the trade publication, Inside Mortgage Finance, the top five originators produced. 44.9% of all loans originated during the first three months of calendar 2004, as compared to 45.3% for the year ended December 31, 2003. Following is a comparison of market share for the top five originators, according to Inside Mortgage Finance:


(1)	Comparative data not included for year in which the institution was not in the top five originators.

We believe the consolidation trend will continue, as market forces will continue to drive out weak competitors. We believe Countrywide will benefit from this trend through increased market share and more rational pricing competition.

Compared to Countrywide, the other industry leaders are less reliant on the secondary mortgage market as an outlet for adjustable rate mortgages, due to their greater portfolio lending capacity. This could place us at

a competitive disadvantage in the future if the demand for adjustable rate mortgages increases significantly, the secondary mortgage market does not provide a competitive outlet for these loans and we are unable to develop an adequate portfolio lending capacity.

The regulatory environments in which we operate have an impact on the activities in which we may engage, how the activities may be carried out and the profitability of those activities. Therefore, changes to laws, regulations or regulatory policies can affect whether and to what extent we are able to operate profitably. For example, proposed state and federal legislation targeted at predatory lending could have the unintended consequence of raising the cost or otherwise reducing the availability of mortgage credit for those potential borrowers with less than prime-quality credit histories. This could result in a reduction of otherwise legitimate sub-prime lending opportunities. Similarly, certain proposed state and federal privacy legislation, if passed, could have an adverse impact on our ability to cross-sell the non-mortgage products our various divisions offer to customers in a cost effective manner.

In March 2004, the Emerging Issues Task Force of the FASB reached consensus opinions regarding the determination of whether an investment is considered impaired, whether the identified impairment is considered other-than-temporary, how to measure other-than-temporary impairment, and how to disclose unrealized losses on investments that are not other-than-temporarily impaired. The consensus opinions, detailed in Emerging Issues Task Force Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments”, add to the Company’s impairment assessment requirements detailed in Emerging Issues Task Force Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased and Retained Interests in Securitized Financial Assets”. The new measurement requirements are applicable to Countrywide’s Quarterly Report for the quarter ending June 30, 2004; the Company has included the new disclosure requirements in its 2003 Annual Report and in this Quarterly Report.

The effect on Countrywide of this pronouncement will be to require management to include in its assessment of impairment of securities classified as available-for-sale, whether the Company has the ability and intent to hold the investment for a reasonable period of time sufficient for the fair value of the security to recover, and whether evidence supporting the recoverability of the Company’s investment within a reasonable period of time outweighs evidence to the contrary. Management does not expect the implementation of these consensuses to have a significant impact on the Company’s financial condition or earnings.

We make forward-looking statements in this report and in other reports we file with the SEC. In addition, we make forward-looking statements in press releases and our management might make forward-looking statements orally to analysts, investors, the media and others.


	•	Projections of our revenues, income, earnings per share, capital expenditures, dividends or capital structure of other financial items

	•	Descriptions of our plans or objectives for future operations, products or services

	•	Forecasts of our future economic performance

	•	Descriptions of assumptions underlying or relating to any of the foregoing

Forward-looking statements give management’s expectation about the future and are not guarantees. Words like “believe,” “expect,” “anticipate,” “promise,” “plan” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. There are a number of factors, many of which are

beyond our control, that could cause actual results to differ significantly from management’s expectations. Some of these factors are discussed below.

Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made. We do not undertake to update them to reflect changes that occur after the date they are made.

Factors that could cause actual results to differ materially from historical results or those anticipated include, but are not limited to:


	•	Changes in general business, economic, and political conditions

	•	Ineffective management of the volatility inherent in the mortgage banking business

	•	Competition within the financial services industry

	•	Significant changes in regulation governing our business

	•	Incomplete or inaccurate information provided by customers and counterparties

	•	A decline in U.S. housing prices or the level of activity in the U.S. housing market

	•	The loss of investment-grade credit ratings, which may result in an increased cost of debt or loss of access to corporate debt markets

	•	A reduction in the availability of secondary markets for mortgage loan products

	•	A reduction in government support of homeownership

	•	A change in our relationship with housing-related government agencies and Government-Sponsored Entities (GSEs)

	•	Ineffective hedging activities

	•	Competition within each business segment

	•	Natural disasters, events, or circumstances that affect the level of claims in the insurance segment

Other risk factors are described elsewhere in this document as well as in other reports and documents that we file with or furnish to the SEC including the Company’s Annual Report on Form 10-K. Other factors that may not be described in any such report or document could also cause results to differ from our expectations. Each of these factors could by itself, or together with one or more other factors, adversely affect our business, results of operations and/or financial condition.

In response to this Item, the information set forth on pages 44 to 45 of this Form 10-Q is incorporated herein by reference.

We have conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report as required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act. Based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective in ensuring that material information relating to the Company, including our consolidated subsidiaries, is made known to the Chief Executive Officer and Chief Financial Officer by others within those entities during the period in which this quarterly report on Form 10-Q was being prepared.

There has been no change in our internal control over financial report during the quarter ended March 31, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

On January 9, 2004, a Special Meeting of Stockholders of the Company was held. The agenda item for that meeting was approval of an amendment to the Company’s Restated Certificate of Incorporation increasing the number of authorized shares of the Company’s Common Stock from 240,000,000 to 500,000,000. The results of the vote of the Company’s Common Stock with respect to that agenda item was:

On January 12, 2004, the Company filed a report on Form 8-K disclosing that the Audit and Ethics Committee of the Company’s Board of Directors determined to engage KPMG LLP as the Company’s independent accountant for the fiscal year commencing January 1, 2004, which effectively dismissed Grant Thornton LLP as the Company’s independent accountant for that fiscal year.

On January 12, 2004, the Company furnished a report on Form 8-K announcing information regarding its operational statistics for the month ended December 31, 2003 and full-year operational data.

On January 28, 2004, the Company furnished a report on Form 8-K announcing information regarding its operations and financial condition for the quarter period ended December 31, 2003 and year-end results.

On February 10, 2004, the Company furnished a report on Form 8-K announcing information regarding its operational statistics for the month ended January 31, 2004.

On February 27, 2004, the Company filed a report on Form 8-K attaching the Financial Statements and Report of Independent Certified Public Accountants for Countrywide Securities Corporation, a California corporation and a wholly-owned indirect subsidiary of CFC for the period beginning January 1, 2003 and ending December 31, 2003.

On March 10, 2004, the Company furnished a report on Form 8-K announcing information regarding its operational statistics for the month ended February 29, 2004.

On March 23, 2004, the Company filed a report on Form 8-K/ A, which amended the Form 8-K filed on January 12, 2004, disclosing that Grant Thornton LLP had completed its audit of the Company’s financial statements for the fiscal year ended December 31, 2003.

On April 12, 2004, the Company furnished a report on Form 8-K regarding its operational statistics for the month ended March 31, 2004 and its thirteen-month statistical data.

On April 21, 2004, the Company furnished a report on Form 8-K regarding its operations and financial condition for the quarter period ended March 31, 2004.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	COUNTRYWIDE FINANCIAL CORPORATION
	(Registrant)

	/s/ STANFORD L. KURLAND

	President and
	Chief Operating Officer


	/s/ THOMAS K. MCLAUGHLIN

	Executive Managing Director and
	Chief Financial Officer

55 EX-3.11 2 v98358exv3w11.txt EXHIBIT 3.11 EXHIBIT 3.11 RESTATED CERTIFICATE OF INCORPORATION OF COUNTRYWIDE CREDIT INDUSTRIES, INC. (Pursuant to Section 245) Countrywide Credit Industries, Inc. a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: 1. The name of the corporation is Countrywide Credit Industries, Inc. The date of filing its original Certificate of Incorporation with the Secretary of State was December 2, 1986. 2. This Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions of the Certificate of Incorporation of this corporation as heretofore amended or supplemented and there is no discrepancy between those provisions and the provisions of this Restated Certificate of Incorporation. 3. The text of the Certificate of Incorporation as amended or supplemented heretofore is hereby restated without further amendments or changes to read as herein set forth in full: FIRST: The name of the Corporation is Countrywide Credit Industries, Inc. SECOND: The purposes for which the Corporation is formed are: To purchase, own, and hold the stock of other corporations, and to do every act and thing covered generally by the denomination "holding corporation", and especially to direct the operations of other corporations through the ownership of 2 stock therein; to purchase, subscribe for, acquire, own, hold, sell, exchange, assign, transfer, mortgage pledge, or otherwise dispose of shares or voting trust certificates for shares of the capital stock of, or any bonds, notes, securities, or evidences of indebtedness created by, any other corporation or corporations organized under the laws of this state or any other state or district or country, nation, or government and also bonds or evidences of indebtedness of the United States or of any state, district, territory, dependency, or country or subdivision or municipality thereof; to issue in exchange therefor shares of the capital stock, bonds, notes, or other obligations of this Corporation and while the owner thereof to exercise all the rights, powers, and privileges of ownership including the right to vote any shares of stock or voting trust certificates so owned; to promote, lend money to, and guarantee the dividends, stocks, bonds, notes, evidences of indebtedness, contracts, or other obligations of and otherwise aid, in any manner which shall be lawful, any corporation or association of which any bonds, stocks, voting trust certificates, or other securities or evidences of indebtedness shall be held by or for this Corporation, or in which, or in the welfare of which, this Corporation shall have any interest, and to do any acts and things permitted by law and designed to protect, preserve, improve, or enhance the value of any such bonds, stocks, or other securities or evidences of indebtedness or the property of this Corporation. To acquire, and pay for in cash, stock or bonds of this Corporation or otherwise, the goodwill, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation. To manufacture, purchase, or otherwise acquire, invest in, own, mortgage, pledge, sell, assign, and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description. To purchase, hold, lease, mortgage, pledge and otherwise acquire, dispose of, and encumber real and personal property of any and every kind and description in all of the states, territories, colonies, dependencies and districts of the United States of America and in any and all foreign countries. To borrow money and contract debts, when necessary for the transaction of the business of the Corporation or for the exercise of its corporate rights, privileges or franchises, or for any other lawful purpose of its incorporation and to issue and dispose of obligations for any amount so borrowed and to mortgage or pledge its property and franchises to secure the payment of such obligations, or of any debt contracted for such purposes, in the manner authorized by law. 3 To purchase or otherwise acquire, hold, exchange, pledge, hypothecate, sell, deal in, and dispose of mortgages covering any kind of property, tax liens, and transfers of tax liens on real estate. To exercise all or any of the corporate powers and to carry out all or any of the purposes, enumerated herein or otherwise granted or permitted by law, while acting as agent, nominee, or attorney in fact for any persons or corporations, and to perform any service under the contract or otherwise for any corporation, joint stock company, association, partnership, firm, syndicate, individual, to other entity, and in such capacity or under such arrangement, to develop, improve, stabilize, strengthen, or extend the property and commercial interest thereof, and to aid, assist, or participate in any lawful enterprises in connection therewith or incidental to such or assistance insofar as it lawfully may under the General Corporation Law of the State of Delaware. To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. The foregoing clauses shall be construed both as objects and powers, and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of this Corporation. THIRD: The aggregate number of shares which the Corporation shall have authority to issue is forty million (40,000,000) shares of Common Stock, of the par values of Five Cents ($.05) per share, and One Million, Five Hundred Thousand (1,500,000) shares of Preferred Stock, of the par value of Five Cents ($.05) per share. The Preferred Stock may be issued in one or more series at such time or times and for such consideration or considerations as the Board of Directors may determine. With respect to the Preferred Stock, the Board of Directors of this Corporation is authorized to determine or alter the voting rights, dividend privileges, liquidation preferences, and all other rights, preferences, privileges and restrictions, including without limitation, conversion rights into Common Stock, granted to or imposed upon any wholly unissued series of Preferred Stock and, within the limitations of restrictions stated in any resolution of the Board of Directors originally fixing the number of shares of Preferred Stock constituting any series, to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of such series subsequent to the issue of shares of that series, to determine the designation of any series and to fix the number of shares of any series. FOURTH: The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, County of New Castle, Wilmington, Delaware 19801. The name of the registered agent of the Corporation at 4 such address is The Corporation Trust Company. FIFTH: No holder of any shares of any class of the Corporation shall be entitled, as such, as a matter of right, to subscribe for or purchase or receive any part of any unissued shares of any class of the Corporation, or of any shares of any class issued and thereafter acquired by the Corporation, whether now authorized or hereafter created, or of any securities of any kind convertible into or evidencing the right to subscribe for or purchase or receive any shares of any class of the Corporation, whether not authorized or hereafter created, and in each case whether issued for cash, property, services or any other consideration, but such shares or other securities may be issued or disposed of by the board of directors to such persons and on such terms as in its discretion it shall deem advisable. SIXTH: The Corporation may indemnify its directors and officers to the full extent permitted by the laws of the State of Delaware. SEVENTH: A director of the Corporation shall have no personal liability to the Corporation or its stockholders for monetary damages for breach of his fiduciary duty as a director to the full extent permitted by the Delaware General Corporation Law as it may be amended from time to time. EIGHTH: The Board of Directors of the Corporation is expressly authorized to make, alter or repeal bylaws of the Corporation. In addition to any requirements of the Delaware General Corporation Law (and notwithstanding the fact that a lesser percentage may be specified by the Delaware General Corporation Law), the affirmative vote of the holders of at least two-thirds (66 2/3%) of the voting power of all of the shares of capital stock of the Corporation then entitled to vote generally in the election of directors, voting together as a single class, shall be required for stockholders of the Corporation to amend, alter, change, adopt or repeal any bylaws of the Corporation unless such amendment, alteration, change adoption or repeal of the bylaws is determined to be advisable by the Board of Directors by the affirmative vote of (a) two thirds of the entire Board of Directors and (b) a majority of those directors who became members of the Board of Directors prior to the time when any stockholder who then is the "beneficial owner" (as such terms defined in rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended) of 10% or more of the then outstanding shares of capital stock of the Corporation then entitled to vote generally in the election of directors, first became the beneficial owner of 10% or more of such outstanding shares of such capital stock (the "Continuing Directors"), even if such directors do not constitute a quorum of the entire Board of Directors. 5 NINTH: Elections of directors need not be by written ballot except and to the extent provided in the bylaws of the Corporation. TENTH: (a) The number of directors shall be as provided in the bylaws. The Board of Directors shall be divided into three classes, designated Class I, Class II, and Class III, such classes to be as nearly equal in number as possible. At the annual meeting of stockholders in 1987, directors of Class I shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of Class II shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of Class III shall be elected to hold office for a term expiring at the third succeeding annual meeting. Thereafter at each annual meeting of stockholders, directors shall be chosen for a term of three years to succeed those whose terms then expire and shall hold office subject to their earlier death, resignation or removal, until the third following annual meeting of stockholders and until the election of their respective successors. (b) any director may be removed from office only for cause and only by the affirmative vote of the holders of two-thirds (66 2/3%) of the voting power of the outstanding shares of Common Stock. (c) any vacancy on the Board of Directors, whether arising through death, resignation or removal of a director or through the increase in the number of directors of any class, shall be filled by a majority vote of all the remaining directors, though less than a quorum. The term of office of any director elected to fill such a vacancy shall expire at the expiration of the term of office of directors of the class to which such director was elected. (d) Notwithstanding any other provisions in this Article, and except as otherwise required by law, whenever the holders of any one or more series of Preferred Stock or other securities of the corporation shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the term of office, the filling of vacancies and other features of such directorships shall be governed by the terms of this Certificate of Incorporation applicable thereto, and unless the terms of this Certificate of Incorporation expressly provide otherwise, such directorships shall be in addition to the number of directors provided in the bylaws, and such directors shall not be classified pursuant to this Article. ELEVENTH: Any action required or permitted to be taken by the stockholders of this Corporation shall be taken at an annual or special meeting of the stockholders. No action may be taken by stockholders by written consent. 6 TWELFTH: (a) Any direct or indirect purchase by the Corporation, or any subsidiary of the Corporation of any Voting Stock (as herein defined) from a person or persons known by the Board of Directors of the Corporation to be an Interested stockholder (as herein defined) who has beneficially owned such Voting Stock for less than two years prior to the date of such purchase or any agreement in respect thereof, at a price in excess of the fair market value (as herein defined), shall require the affirmative vote of no less than a majority of the votes cast by the holders, voting together as a single class, of all then outstanding shares of capital stock of the Corporation entitled to vote generally on matters relating to the Corporation, excluding for this purpose the votes by the Interested Stockholder, unless a greater vote shall be required by law. (b) Such affirmative vote shall not be required for a purchase or other acquisition of securities of the same class made on substantially the same terms to all holders of such securities and complying with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations). Furthermore, such affirmative vote shall not be required for any purchase effected on the open market and not the result of a privately-negotiated transaction. (c) For the purposes of this Article: (i) A "person" shall mean any individual, firm, corporation or other entity. (ii) "Voting Stock" shall mean any class or series of the capital stock of the Corporation having the right to vote generally on matters relating to the Corporation and any security which is convertible into such stock. (iii) "Interested Stockholder" shall mean any person (other than the Corporation or any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation or profit sharing, employee stock ownership or other employee benefit plan of the Corporation or any subsidiary thereof, or any trustee or other fiduciary with respect to any such plan when acting in such capacity) who or which: A. is the beneficial owner, directly or indirectly, of 5% or more of the outstanding Voting Stock; or B. is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 5% or more of the outstanding Voting Stock; or 7 C. is an assignee or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by an Interested Shareholder, if such assignment or succession shall have occurred in the course of a transaction or transactions not involving a public offering within the meaning of the Securities Act of 1933, as amended. (iv) A person shall be a "beneficial owner" of any Voting Stock of the Corporation: A. which such person or any of its Affiliates or Associates beneficially owns, directly or indirectly, or B. which such person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) any right to vote pursuant to any agreement, arrangement or understanding; or C. which are beneficially owned, directly or indirectly, by any other person with which such person or any of its affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing any Voting Stock of the Corporation. (v) For the purposes of determining whether a person is an Interested Stockholder pursuant to subparagraph (ii) hereof, Voting Stock outstanding shall be deemed to comprise all Voting Stock deemed owned through application of subparagraph (iii) hereof, but shall not include other Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. (vi) "Affiliate" or "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended. (vii) "Fair Market Value" shall mean as to each class of stock or other security which constitutes Voting Stock, the highest closing sale price during the thirty-day period immediately preceding the date in question of a share of such stock on the composite tape for New York Stock Exchange-listed stocks, or, if such stock is not quoted on such composite tape or if such stock is not listed on such exchange, on the 8 principal United States securities exchange registered under the Exchange Act on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the thirty-day period preceding the date in question on the National Association of Securities Dealers, Inc., Automated Quotations System or any system then in use. Or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the Board of Directors of the Corporation in good faith. (d) The Board of Directors shall have the power and duty to determine, for purposes of this Article, on the basis of information known to the Board: (i) the amount of Voting Stock beneficially owned by any person; (ii) when such person acquired a beneficial interest in such Voting Stock; (iii) whether such person owns 5% or more of the Voting Stock; (iv) the aggregate number of shares of stock and the aggregate amount any other security outstanding at any time; (v) whether a person is an Affiliate or Associate of another; and (vi) whether paragraphs (a) or (b) above are or have become applicable in respect of a proposed purchase of Voting Stock by the Corporation. and any such determination made in good faith shall be conclusive and binding for all purposes of this Article. THIRTEENTH: The Corporation hereby reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by the Delaware General Corporation Law and all rights conferred on stockholders therein granted are subject to this reservation; provided, however, that, notwithstanding the fact that a lesser percentage may be specified by the Delaware General Corporation Law, the affirmative vote of the holders of at least two-thirds (66 2/3%) of the voting power of all of the shares of capital stock of the Corporation then entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter, change or repeal, or adopt any provision or provisions inconsistent with, any provision of Article Eighth, Tenth, Eleventh, Twelfth, or Thirteenth hereof, unless such amendment, alteration, change, repeal or 9 adoption of any inconsistent provision or provisions is declared advisable by the Board of Directors by the affirmative vote of (a) two-thirds of the entire Board of Directors and (b) a majority of the Continuing Directors ( as defined in Article Eighth). 4. This Restated Certificate of Incorporation was duly adopted by the Board of Directors in accordance with Section 245 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said Countrywide Credit Industries, Inc. has caused this certificate to be signed by David S. Loeb, its President, and attested by Paul H. Moeller, it s Secretary, this 14th day of July, 1987. By /s/ David S. Loeb ---------------------------------- David S. Loeb President ATTEST: By /s/ Paul H. Moeller ------------------------- Paul H. Moeller Secretary CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES A PARTICIPATING PREFERRED STOCK of COUNTRYWIDE CREDIT INDUSTRIES, INC. Pursuant to Section 151 of the General Corporation Law of the State of Delaware We, David Loeb, Chairman of the Board and President and Dennis Slattery, Secretary, of Countrywide Credit Industries, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 3 thereof, DO HEREBY CERTIFY: That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the said Corporation, the said Board of Directors on February 10, 1988, adopted the following resolution creating a series of 250,000 shares of Preferred Stock designated as Series A Participating Preferred Stock: RESOLVED, that pursuant to the authority vested in the Board of Directors of this Company in accordance with the provisions of its Certificate of Incorporation, a series of Preferred Stock of the Company be and it hereby is created, and that the designation and amount thereof and the powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: Section 1. Designation and Amount. The shares of such series shall be designated as "Series A Participating Preferred Stock" $0.05 par value per share, and the number of shares constituting such series shall be 250,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Participating Preferred Stock to a number less than that of the shares then outstanding plus the number of shares issuable upon exercise of outstanding rights, options or warrants or upon conversion of outstanding securities issued by the Corporation. Section 2. Dividends and Distribution. (A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Participating Preferred Stock with respect to the dividends, the holders of shares of Series A Participating Preferred Stock in preference to the holders of shares of Common Stock, par value $.05 per share (the "Common Stock"), of the Corporation and any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00, or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of common stock (by reclassification or otherwise), declared on the Common Stock, since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Participating Preferred Stock. In the event the Corporation shall at any time after February 26, 1988 (the "Rights Declaration Date") (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Corporation shall declare a dividend or distribution on the Series A Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall 2 have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Participating Preferred Stock unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Participating Preferred Stock in the an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Participating Preferred stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of shares of Series A Participating Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Participating Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Corporation. (B) Except as otherwise provided herein or by law, the holders of shares of Series A Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation. 3 (C) (i) If at any time dividends on any Series A Participating Preferred Stock shall be in arrears in an amount equal t six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a "default period") which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly period on all shared of Series A Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including holders of the Series A Participating Preferred Stock) with dividends in arrears in an amount equal to six (6) quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect (2) Directors. (ii) During any default period, such voting right of the holders of Series A Participating Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of shareholders, and thereafter at annual meeting of shareholders provided that neither such voting right nor the right of the holders of any other series of Preferred Stock, if any, to increase, in certain cases, the authorized number of Directors shall be exercised unless the holders of ten percent (10%) in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock should not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such right is exercised at an annual meeting, to elect two (2) Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased of decreased except by vote of the holders of the Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Participating Preferred Stock. (iii) Unless the holders of Preferred Stock shall, during an existing default 4 period, have previously exercised their right to elect Directors, the Board of Directors may order, or any shareholder or shareholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding, irrespective if series, may request, the calling of a special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice-President or the Corporate Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 10 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days of such order or request, such meeting may be called on similar notice by any shareholder or shareholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the shareholders. (iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Preferred Stock shall have exercised their right to elect two (2) Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. (v) Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in, or pursuant to, the Restated Certificate of Incorporation or By-Laws irrespective of any increase made 5 pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however to change thereafter in any manner provided by law or in the Restated Certificate of Incorporation of By-Laws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors, even though less than a quorum. (D) Except as set forth herein, holders of Series A Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrications. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Participating Preferred Stock as provided in Section 2 are in arrears thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up)to the Series A Participating Preferred Stock; (ii) declare any pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock except dividends paid ratably on the Series A Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution, or winding up) with the Series A Participating Preferred Stock provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon 6 dissolution, liquidation or winding up) to the Series A Participating Preferred Stock; or (iv) purchase or otherwise acquire for consideration any shares of Series A Participating Preferred Stock or any shares of stock ranking on a parity with the Series A Participating Preferred Stock except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4 purchase or otherwise acquire such shares at such time and in such manner. Section 5. Reacquired Shares. Any shares of Series A Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Participating Preferred Stock shall have received per share, the greater of 100 times $35 or 100 times the payment made per share of Common Stock, plus and amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series A Liquidation Preference"). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Participating Preferred Stock unless, prior thereto, the holders of shares of 7 Common Stock shall have received an amount per share (the "Common Adjustment" equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in subparagraph C below to reflect such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii), the "Adjustment Number"). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Participating Preferred Stock and Common Stock, respectively, holders of Series A Participating Preferred Stock and holders of shares of Common Stock shall receive their retable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. (B) In the event there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and liquidation preferences of all other series of Preferred Stock, if any, which rank on a parity with the Series A Participating Preferred Stock then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. (C) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock that were outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share 8 (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is change or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that are outstanding immediately prior to such event. Section 8. Redemption. The shares of Series A Participating Preferred Stock shall not be redeemable. Section 9. Ranking. The Series A Participating Preferred Stock shall rank junior to all other series of the Corporation's Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. Section 10. Amendment. The Restated Certificate of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series A Participating Preferred Stock voting separately as a class. Section 11. Fractional Shares. Series A Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holders fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Participating Preferred Stock. RESOLVED FURTHER, that the proper officers of the Corporation be, and each of them hereby is, authorized to execute a Certificate of Designation with respect to the Series A Participating Preferred Stock pursuant to Section 151 of the General Corporation Law of the State of Delaware and to take all appropriate action to cause such Certificate to become effective, including, but not limited to, the filing and recording of such Certificate with and/or by the Secretary of State of the State of Delaware. 9 IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this 11th day of February, 1988. /s/ David Loeb ----------------------------- Chairman of the Board and President Attest: /s/ Dennis Slattery - --------------------------------- Secretary 10 CERTIFICATE OF DESIGNATION OF $23.75 CONVERTIBLE PREFERRED STOCK OF COUNTRYWIDE CREDIT INDUSTRIES, INC. Pursuant to Section 151 of the General Corporation Law of the State of Delaware COUNTRYWIDE CREDIT INDUSTRIES, INC., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), does hereby certify that, pursuant to the authority conferred on the Board of Directors of the Corporation by the Restated Certificate of Incorporation, as amended, of the Corporation and in accordance with Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Corporation (and, as to certain matters allowed by law, a duly authorized committee thereof) adopted the following resolution establishing a series of 184,000 shares of Preferred Stock of the Corporation designated as $23.75 Convertible Preferred Stock": RESOLVED, that pursuant to the authority conferred on the Board of Directors of this Corporation by the Certificate of Incorporation, a series of Preferred Stock, par value $.05 per share, of the Corporation be and hereby is established and created, and that the designation and numb40er of shares thereof and the voting and other powers, preferences and relative, participating, optional or other rights of the shares of such series and the qualifications, limitations and restrictions thereof are as follows: $23.75 Convertible Preferred Stock 1. Designation and Amount: There shall be a series of Preferred Stock designated as "$23.75 Convertible Preferred Stock" and the number of shares constituting such series shall be 184,000. Such series is referred to herein as the "Preferred Stock". 2. Stated Capital. The amount to be represented in stated capital at all times for each share of Preferred Stock shall be $.05. 3. Rank. All shares of Preferred Stock shall rank prior to all of the Corporation's Common Stock, par value $.05 per share (the "Common Stock"), now or hereafter issued and all of the Corporation's Series A Participating Preferred Stock (the "Series A Preferred Stock"), both as to payment of dividends and as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. 4. Dividends. The holders of the shares of Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors of the Corporation or a duly authorized committee thereof, out of funds legally available therefor, cumulative cash dividends at the rate of $23.75 per share per annum on March 31, June 30, September 30, and December 31 of each year, commencing September 30, 1990; provided that, if on any such day banks in The City of New York are authorized or required to close, dividends otherwise payable on such day shall be payable on the next day that banks in The City of New York are not authorized or required to close. Each dividend on the Preferred Stock shall be payable to holders of record as they appear on the stock register of the Corporation on such record date, which shall be no more than forty days prior to the payment date therefor, as shall be fixed by the Board of Directors of the Corporation or a duly authorized committee thereof. The dividends on the shares of Preferred Stock shall be cumulative from the date of first issuance and shall be deemed to accrue from day to day regardless of whether or not the Corporation shall have funds or assets available for the payment of such dividends. The amount of dividends payable on each share of Preferred Stock for each quarterly dividend period shall be computed by dividing the annual dividend rate by four. The amount of dividends payable for the initial dividend period and for any period shorter than a full quarterly dividend period shall be computed on the basis of a 360-day year of twelve 30-day months. Holders of shares of Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full dividends (including accrued dividends, if any) on shares of Preferred Stock. No interest or sum of money in lieu of interest shall be payable in respect of any dividend or payments which may be in arrears. 2 Dividends in arrears payable, if declared, but not paid on any quarterly dividend payment date may be declared by the Board of Directors of the Corporation or a duly authorized committee thereof and paid on any date fixed by the Board of Directors of the Corporation or a duly authorized committee thereof, whether or not a quarterly dividend payment date, to the holders of record of the shares of Preferred Stock, as they appear on the stock register of the Corporation on such record date, which shall be no more than forty days prior to the payment date therefor, as shall be fixed by the Board of Directors of the Corporation or a duly authorized committee thereof. The Corporation may not declare or pay any dividend or make any distribution of assets (other than dividends paid or other distributions made in stock of the Corporation ranking junior to the Preferred Stock as to the payment of dividends and the distribution of assets upon liquation, dissolution or winding up) on, or redeem, purchase or otherwise acquire (except upon conversion or exchange for stock of the Corporation ranking junior to the Preferred Stock as to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up), shares of Common Stock, of Series A Preferred Stock or of any other Stock of the Corporation ranking junior to the Preferred Stock as to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, unless all accrued and unpaid dividends on the Preferred Stock for all prior dividend periods have been or contemporaneously are declared and paid and the full quarterly dividend on the Preferred Stock for the current dividend period has been or contemporaneously is declared and set apart for payment. Whenever all accrued dividends on the Preferred Stock are not pad in full, the Corporation may not declare or pay dividends or make any distribution of assets (other than dividends paid or other distributions made in stock of the Corporation ranking junior to the Preferred Stock as to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up) on any other stock of the Corporation ranking on a parity with the Preferred Stock as to the payment of dividends unless (i) all accrued and unpaid dividends on the Preferred Stock for all prior dividend periods are contemporaneously declared and paid or (ii) all dividends declared and paid or set aside for payment or other distributions made on Preferred Stock and any other stock of the Corporation ranking on a parity with the Preferred Stock as to the payment of dividends are declared and paid or set apart for payment or made pro rata so that the amount of dividends declared and paid or set apart for payment or other distributions made per share on the Preferred Stock and such other stock of the Corporation will bear the same ratio that accrued and unpaid dividends per share on the Preferred Stock and such other stock of the Corporation bear to each other. 3 Whenever all accrued dividends on the Preferred Stock are not paid in full, the Corporation may not redeem, purchase or otherwise acquire (except upon conversion or exchange for stock of the Corporation ranking junior to the Preferred Stock as to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up) other stock of the Corporation ranking on a parity with the Preferred Stock as to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up unless (i) all outstanding shares of the Preferred Stock are contemporaneously redeemed or (ii) a pro rata redemption is made of shares of Preferred Stock and such other stock of the Corporation, with the amount allocable to each series of such stock determined on the basis of the aggregate liquidation preference of the outstanding shares of each series and the shares of each series being redeemed only on a pro rata basis. 5. Liquidation of Preference. Upon the dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, the holders of the shares of Preferred Stock shall be entitled to receive and to be paid out of the assets of the Corporation available for distribution to its stockholders (after any payment or distribution on any stock of the Corporation ranking senior to the Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up and before any payment or distribution on the Common Stock, the Series A Preferred Stock or any other stock of the Corporation ranking junior to the Preferred Stock as to the distribution of assets upon liquidation, dissolution or winding up) a liquidation distribution in the amount of $250.00 per share plus an amount equal to all dividends on such shares accumulated (whether or not earned or declared) and unpaid thereon to the date of final distribution. Neither the sale of all or substantially all the property or business of the Corporation, nor the merger or consolidation of the Corporation into or with any other corporation, nor the merger or consolidation of any other Corporation into or with the Corporation shall constitute a liquidation, dissolution or winding up, voluntary or involuntary, for the purposes of the foregoing paragraph. After the payment to the holders of the shares of Preferred Stock of the full preferential amounts provided for above, the holders of the shares of Preferred Stock as much shall have no right or claim to any of the remaining assets of the Corporation. In the event the assets of the Corporation available for distribution to the holders of the shares of Preferred Stock upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full all 4 amounts to which such holders are entitled as provided above, no such distribution shall be made on account of any other stock of the Corporation ranking on a parity with the Preferred Stock as to the distribution of assets upon such liquidation, dissolution or winding up unless a pro rata distribution is made on the Preferred Stock and such other stock of the Corporation, with the amount allocable to each series of such stock determined on the basis of the aggregate liquidation preference of the outstanding shares of each series and distributions to the shares of each series being made on a pro rata basis. 6. Voting Rights. (a) General. The holders of the Preferred Stock shall have no voting rights except as described below or as required by law. In exercising any such vote, each outstanding share of Preferred Stock shall be entitled to one vote. (b) Default Voting Rights. Whenever dividends on the shares of Preferred Stock or on the shares of any other outstanding stock of the Corporation ranking on a parity with the Preferred Stock as to the payment of dividends have not been paid in an aggregate amount equal to at least six quarterly dividends on such shares (whether or not consecutive), the number of directors of the Corporation shall be increased by two and the holders of the shares of Preferred Stock, voting separately as a class with the holders of the shares of such other parity stock of the Corporation on which like voting rights have been conferred and are exercisable, shall have the exclusive right to vote for and elect such two additional directors to the Board of Directors of the Corporation at any meeting of stockholders of the Corporation at which directors are to be elected held during the period such dividends remain in arrears. Each class or series of stock entitled to vote for the additional directors shall have a number of votes proportionate to the aggregate liquidation preference of its outstanding shares. Such voting right will terminate when all such dividends accrued and in default have been paid in full or set apart for payment. The term of office of all directors so elected shall terminate immediately upon such payment or setting apart for payment. Whenever such right shall vest, it may be exercised initially either at a special meeting of holders of Preferred Stock or at any annual stockholders' meeting, but thereafter it shall be exercised only at annual stockholders' meetings. Any director who shall have been elected by the holders of Preferred Stock as a class pursuant to this subparagraph (b) shall hold office for a term expiring (subject to the earlier termination of the default in dividends) at the next annual meeting of stockholders, and during such term 5 may be removed at any time, either for or without cause, by, and only by, the affirmative votes of the holders of record of a majority of the outstanding shares of Preferred Stock given at a special meeting of such stockholders called for such purpose, and any vacancy created by such removal may also be filled at such meeting. Any vacancy caused by the death or resignation of a director who shall have been elected by the holders of Preferred Stock as a class pursuant to this subparagraph (b) may be filled only by the holders of all outstanding Preferred Stock at a meeting called for such purpose. Whenever a meeting of the holders of Preferred Stock is permitted or required to be held pursuant to this subparagraph (b), such meeting shall be held at the earliest practicable date and the Secretary of the Corporation shall call such meeting, providing written notice to all holders of record of Preferred Stock in accordance with law, upon the earlier of the following: (a) as soon as reasonably practicable following the occurrence of the event or events permitting or requiring such meeting hereunder; or (b) within twenty (20) days following receipt by said Secretary of a written request for such a meeting, signed by the holders of record of at least twenty percent (20%) of the shares of Preferred Stock then outstanding. In the event that such meeting shall not be called by the proper corporate officers within twenty (20) days after the receipt of such request by the Secretary of the Corporation, or within twenty-five (25) after the mailing of same within the United States of America by registered mail addressed to the Secretary of the Corporation at its principal office, then the holders of record of at least twenty percent (20%) of the shares of Preferred Stock then outstanding may designate of their number to call such a meeting at the expense of the Corporation, and such meeting may be called by such person in the manner and at the place provided in this Section 6. Any holder of Preferred Stock so designated to call such meeting shall have access to the stock books of the Corporation for the purpose of causing a meeting of such stockholders to be so called. Any provision of this subparagraph (b) to the contrary notwithstanding, no Special meeting of the holders of shares of Preferred Stock: (i) shall be held during the ninety (90) day period next preceding the date fixed for the annual meeting of stockholders of the Corporation; or (ii) shall be required to be called or held in violation of any law, rule or regulation. 6 Any meeting of the holders of all outstanding Preferred Stock entitled to vote as a class for the election or removal of directors shall be held at the place at which the last annual meeting of stockholders was held. At such meeting, the presence in person or by proxy of the holders of a majority of the outstanding shares of all outstanding Preferred Stock shall be required to constitute a quorum; in the absence of a quorum, a majority of the holders present in person or by proxy shall have the power to adjourn the meeting from time to time without notice, other than announcement at the meeting, until a quorum shall be present. (c) Class Voting Rights. In addition, so long as any Preferred Stock is outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of at least 66-2/3 percent of all the outstanding shares of Preferred Stock voting separately as a class, (i) amend, alter or repeal any provision of the Restated Certificate of Incorporation or the By-Laws of the Corporation so as adversely to affect the relative rights, preferences, qualifications, limitations or restrictions of the Preferred Stock, (ii) authorize, issue or increase the authorized amount of any class or series of stock, or any security convertible into stock of such class or series, ranking senior to the Preferred Stock as to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of the Corporation or (iii) effect any reclassification of the Preferred Stock. The affirmative vote or consent of the holders of a majority of all the outstanding shares of Preferred Stock, voting or consenting separately as a class, shall be required to (A) authorize any sale, lease or conveyance of all or substantially all of the assets of the Corporation, or (B) approve any merger, consolidation or compulsory share exchange to which the Corporation is a party, unless (i) the terms of such merger, consolidation or compulsory share exchange do not provide for a change in the terms of the Preferred Stock and (ii) the Preferred Stock is on a parity with or prior to (in respect of the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up) any other class or series of capital stock authorized by the surviving corporation, other than any class or series of stock of the Corporation ranking senior as to the Preferred Stock either as to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of the Corporation and previously authorized with the consent of holders of Preferred Stock as described herein (or other than any capital stock into which such prior stock is converted as a result of such merger, consolidation or compulsory share exchange). 7 7. Redemption at Option of the Corporation. The shares of Preferred Stock shall not be redeemable prior to July 1, 1993. Commencing July 1, 1993, the shares of Preferred Stock will be redeemable for cash, in whole or in part, at any time at the option of the Corporation, if redeemed during the 12-month period beginning July 1 of the year specified below, at the following redemption prices;

and thereafter at $250.00 per share, plus in each case accrued and unpaid dividends to the redemption date (the "Redemption Price") If less than all the outstanding shares of Preferred Stock are to be redeemed, the Corporation shall select those to be redeemed pro rata or by lot or in such other manner as the Board of Directors of the Corporation or a duly authorized committee thereof may determine. There shall be no mandatory redemption or sinking fund obligation with respect to the Preferred Stock. Not more than 60 nor less than 30 days prior to the redemption date, notice by first class mail, postage prepaid, shall be given to the holders of record of the Preferred Stock to be redeemed, addressed to such stockholders at their last addresses as shown on the books of the Corporation. Each such notice of redemption shall specify the date fixed for redemption, the Redemption Price, the place or places of payment, that payment will be made upon presentation and surrender of the shares of Preferred Stock, that on and after the redemption date, dividends will cease to accumulate on such shares, the then-effective conversion rate pursuant to Section 9 and that the right of holders to convert shall terminate at the close of business on the redemption date. Any notice which is mailed as herein provided shall be conclusively presumed to have been duly given, whether or not the holder of the Preferred Stock receives such notice; and failure to give such notice by mail, or any defect in such notice, to the holders of any shares designated for redemption shall not affect the validity of the proceedings 8 for the redemption of any other shares of Preferred Stock. On or after the date fixed for redemption as stated in such notice, each holder of the shares called for redemption shall surrender the certificate evidencing such shares to the Corporation at the place designated in such notice and shall thereupon be entitled to receive payment of the Redemption Price. If less than all the shares represented by any such surrendered certificate are redeemed, a new certificate shall be issued representing the unredeemed shares. If, on the date fixed for redemption, funds necessary for the redemption shall be available therefor and shall have irrevocably deposited or set aside, then, notwithstanding that the certificates evidencing any shares so called for redemption shall not have been surrendered, the dividends with respect to the shares so called shall cease to accumulate after the date fixed for redemption, the shares shall no longer be deemed outstanding, the holders thereof shall cease to be stockholders with respect to the shares so called for redemption (except the right of the holders to receive the Redemption Price without interest upon surrender of their certificates therefor) shall terminate. 8. Contingent Redemption at Option of Holder. In the event that there occurs a Designated Event (as hereinafter defined) with respect to the Corporation, each holder of shares of Preferred Stock shall have the right, at the holder's option, to require the Corporation to redeem all or any part of such holder's shares of Preferred Stock on the date (the "Contingent Redemption Date") that is 100 days after the rating Decline, at $250.00 per share plus accrued and unpaid dividends to the Contingent Redemption Date. On or before the twenty-eighth day after the Designated Event, the Corporation is obligated to notify the transfer agent for the Preferred Stock of such event, and promptly thereafter to mail, or cause to be mailed, to each holder of record of the shares of Preferred Stock notice regarding the Designated Event and the redemption right. The Corporation shall use its best efforts to cause such notice to be disseminated to beneficial owners of the Preferred Stock in accordance with Rule 13e-4(e) (1) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The notice shall state the Contingent Redemption Date, the date by which the redemption right must be exercised, the applicable price for such shares of Preferred Stock and the procedure which the holder must follow to exercise this right. The Corporation will cause a copy of such notice to be published in an English language newspaper of general circulation in the Borough of Manhattan, The City of New York. To exercise this right, the holder of shares of Preferred Stock must deliver at least ten days prior to the Contingent Redemption Date (the "Contingent Redemption Record Date") written notice to the Corporation (or an 9 agent designated by the Corporation for such purpose) of the holder's exercise of such right, together with the certificate for the shares with respect to which the right is being exercised, duly endorsed for transfer. Such written notice may be withdrawn at any time prior to the Contingent Redemption Record Date. As used herein, a "Designated Event" shall be deemed to have occurred at such times as (i) a "person" or "group" (within the meaning of Sections 13(d) and 14 (d) (2) of the Exchange Act), other than a holding company created as permitted by clause (ii)(a) of this paragraph, becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 30% of the total voting power of all classes of stock then outstanding of the Corporation normally entitled to vote in elections of directors ("Voting Stock"), (ii) the Corporation consolidates with or merges into another corporation or conveys, transfers or leases all or substantially all of its assets to any person, or any corporation consolidates with or merges into the Corporation, in either event pursuant to a transaction in which Voting Stock, of the Corporation is changed into or exchanged for cash, securities or other property, provided that such transactions (A) involving solely the creation of a public holding company or the reincorporation of the Corporation in another state or (B) involving the exchange of the Corporation's Voting Stock as consideration in the acquisition of another business or businesses, without change or exchange of the Corporation's outstanding Voting Stock, shall be excluded from the operation of this clause (ii); or (iii) the Corporation, any subsidiary of the Corporation or any employee benefit plan maintained by the Corporation or any subsidiary of the Corporation purchases or otherwise acquires, directly or indirectly, beneficial ownership of Voting Stock of the Corporation if, after giving affect to such purchase or acquisition, the Corporation (together with its subsidiaries and an such plans) shall have acquired, within any 12-month period, a number of shares of the Corporation's Voting Stock equal to 30% or more of the number of shares of the Corporation's Voting Stock outstanding on the date immediately prior to the first such purchase or acquisition during such 12-month period (as adjusted in such manner as the Corporation reasonably deems appropriate to reflect any stock dividends or stock splits during such period); or (iv) on any date (a "Calculation Date") the Corporation makes any distribution or distributions of cash, property or securities (other than regular dividends and distributions of capital stock, or rights to acquire capital stock, of the Corporation) to holders of Voting Stock of the Corporation or the Corporation, any subsidiary or any employee benefit plan maintained by the Corporation or any subsidiary purchases or otherwise acquires, directly or indirectly, beneficial ownership of Voting Stock of the Corporation 10 and the sum of the fair market value (as determined in good faith by the Corporation's Board of Directors, which determination shall be conclusive) of such distribution or purchase, plus the fair market value of all other such distributions by the Corporation and purchases by the Corporation together with its subsidiaries and any such plans which have occurred during the preceding 12-month period, is at least 30% of the fair market value of the outstanding Voting Stock of the Corporation (based on the closing sale price of the Voting Stock of the Corporation (based on the closing sale price of the Voting Stock as reported in The Wall Street Journal). This percentage is calculated on each Calculation Date by determining the percentage of the fair market value of the Corporation's outstanding Voting Stock as of such Calculation Date which is represented by the fair market value of the distributions and purchases which have occurred on such date and adding to that percentage all of the percentages which have been similarly calculated on the Calculation Dates of all such distributions and purchases during the preceding 12-month period. As used in the preceding paragraph, "Company" shall mean the Corporation or any holding company permitted under clause (ii) (a) thereof which may be created. 9. Conversion Rights. (a) Right to Covert. Subject to and upon compliance with the provisions of this Section, the holder of any Shares of Preferred Stock shall have the right, at his option, at any time (except that, with respect to any Shares of Preferred Stock which shall be called for redemption, such right shall terminate, except as provided in the third paragraph of Section 9(b) hereof, at the close of business on the date fixed for redemption of such shares of Preferred Stock unless the Corporation shall default in payment due upon redemption thereof) to convert any number of shares of Preferred Stock that is an integral multiple of 1/10th of one share into fully paid and nonassessable shares of Common Stock (as such shares shall be constituted) initially at the conversion price of $9.375 per share of Common Stock, subject to adjustment as described below (such price or adjusted price being referred to herein as the "Conversion Price"), by surrender of the Preferred Stock so to be converted in whole or in part in the manner provided in Section 9(b) below. For purposes of conversion, each share of Preferred Stock shall be valued at $250, which shall be divided by the then current Conversion Price in effect to determine the number of full shares issuable upon conversion thereof. For the purpose of this Section 9, the term "Common Stock" shall initially mean the class designated as Common Stock, par value $.05 per share, of the Corporation as of the date hereof, subject to adjustment as hereinafter provided. 11 (b) Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends. In order to exercise the conversion privilege, the holder of any shares of Preferred Stock to be converted in whole or in part shall surrender the certificate representing such shares of Preferred Stock (the "Preferred Stock Certificate") at the office of the transfer agent for the Preferred Stock, and shall give written notice of conversion in the form provided on the Preferred Stock Certificates (or such other notice which is acceptable to the Corporation) to the Corporation at such office or agency that the holder elects to convert such shares of Preferred Stock represented by the Preferred Stock Certificates so surrendered or the portion thereof specified in said notice. Such notice shall also state the name or names (with address) in which the certificate or certificates for shares of Common Stock which shall be issuable on such conversion shall be issued, and shall be accompanied by transfer taxes, if required pursuant to Section 9(f) hereof. Each Preferred Stock Certificate surrendered for conversion shall, unless the shares issuable on conversion are to be issued in the same name as the registration of such Preferred Stock Certificate, by duly endorsed by, or be accompanied by instruments of transfer in form satisfactory to the Corporation duly executed by, the holder or his duly authorized attorney. As promptly as practicable after the surrender of such Preferred Stock Certificate and the receipt of such notice and funds, if any, as aforesaid, the Corporation shall issue and shall deliver at such office or agency to such holder, or on his written order, a certificate or certificates for the number of full shares issuable upon the conversion of such shares Preferred Stock represented by the Preferred Stock Certificates so surrendered or portion thereof in accordance with the provisions of this Section and a check or cash in respect of any fractional interest in respect of a share of Common Stock arising upon such conversion as provided in Section 9(c) hereof. In case less than all of the shares of Preferred Stock represented by a Preferred Stock Certificate surrendered for conversion are to be converted, the Corporation shall deliver to or upon the written order of the holder of such Preferred Stock Certificate a new Preferred Stock Certificate representing the shares of Preferred Stock not converted. If a holder fails to notify the Corporation of the number of shares which such holder wishes to convert, such holder shall be deemed to have elected to covert all shares represented by the certificate or certificates surrendered for conversion. Each conversion shall be deemed to have been effected on the date on which such Preferred Stock Certificate shall have been surrendered and such notice shall have been received by the Corporation, as aforesaid, and the person in whose name any certificate 12 or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become on said date the holder of record of the shares represented thereby; provided, however, that any such surrender on any date when the stock transfer books of the Corporation shall be closed shall constitute the person in whose name the certificates are to be issued as the record holder thereof for all purposes on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the conversion price in effect on the date upon which such Preferred Stock Certificate shall have been surrendered. The dividends due on any Preferred Stock surrendered for conversion during the period from the close of business on the record date for any dividend payment date to the opening of business on such dividend payment date shall be paid to the record holder of such Preferred Stock, notwithstanding such conversion. (c) Cash Payments in Lieu of Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon conversion of Preferred Stock. The number of full shares of Common Stock which shall be issuable to a holder of Preferred Stock upon conversion shall be computed on the basis of the whole number of shares of Preferred Stock (or specified portions thereof to the extent permitted hereby) surrendered by such holder for conversion. If any fractional share of Common Stock would be issuable upon the conversion of any shares of Preferred Stock, the Corporation shall make an adjustment therefor in cash at the current market value thereof. The current market value of a share of Common Stock shall be the last reported price on the first day (which is not a legal holiday as defined below) immediately preceding the day on which the shares of Preferred Stock are deemed to have been converted and such last reported price shall be determined as provided in the last sentence of subsection (D) of Section 9(d). The term "Legal Holiday" shall mean a legal holiday or a day on which banking institutions in Los Angeles or any national securities exchanges are authorized by law or by executive order to close. (d) Adjustment of Conversion Price. The conversion price shall be adjusted from time to time as follows: (A) In case the Corporation shall (i) pay a dividend or make a distribution in shares of its capital stock (whether shares of Common Stock or of capital stock of any other class), (ii) subdivide its outstanding Common Stock or (iii) combine its outstanding Common Stock into a smaller number of shares, the conversion price in effect 13 immediately prior thereto shall be adjusted so that the holder of any share of Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of capital stock of the Corporation which he would have owned or have been entitled to receive after the happening of any of the events described above had such share of Preferred Stock been converted immediately prior to the happening of such event. An adjustment made pursuant to this subsection (A) shall become effective immediately after the record date in the case of a dividend and shall become effective immediately after the effective date in the case of subdivision or combination. If, as a result of an adjustment made pursuant to this subsection (A), the holder of any share of Preferred Stock thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of capital stock of the Corporation, the Board of Directors (whose determination shall be conclusive and shall be described in a written statement filed with the transfer agent for the Preferred Stock) shall determine the allocation of the adjusted conversion price between or among shares of such classes of capital stock. (B) In case the Corporation shall issue rights or warrants (other than rights pursuant to the Rights Agreement, dated as of February 10, 1988, between the company and Bank of America NT&SA, as such agreement may be amended from time to time (the "Rights")) to all holders of its Common Stock entitling them (for a period expiring within 90 days after the record date mentioned below) to subscribe for or purchase Common Stock at a price per share less than the current market price per share of Common Stock (as defined in subsection (D) below) at the record date of the determination of stockholders entitled to receive such rights or warrants, the conversion price in effect immediately prior thereto shall be adjusted so that the same shall equal the price determined by multiplying the conversion price in effect immediately prior to the date of issuance of such rights or warrants by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such current market price, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase. Such adjustment shall be made successively whenever any such rights or warrants are issued, and shall become effective immediately 14 after such record date. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such current market price, and in determining the aggregate offering price of such shares, there shall taken into account any consideration received by the Corporation for such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors. (C) In case the Corporation shall distribute to all holders of its Common Stock evidences of its indebtedness or assets (excluding cash dividends or distributions paid from retained earnings of the Corporation) or rights or warrants (other than the Rights) to subscribe for or purchase Common Stock (excluding those referred to in subsection (B) above), then in each such case the conversion price shall be adjusted so that the same shall equal the price determined by multiplying the conversion price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the current market price per share (as defined in subsection (D) below) of the Common Stock on the record date mentioned below less the then fair market value (as determined by the Board of Directors of the Corporation, whose determination shall be conclusive), of the portion of the assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, and the denominator shall be the current market price per share (as defined in subsection (D) below) of the Common Stock. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (D) For the purpose of any computation under subsections (B) and (C) above, the current market price per share of Common Stock at any date shall be deemed to be the average of the last reported prices for the ten consecutive days (which are not Legal Holidays as defined in Section 9(b)) next preceding the day in question. The last reported price for each day shall be the last reported sale price of Common Stock on the New York Stock Exchange (or, if not listed on the New York Stock Exchange, then on such other exchange on which the Common Stock is listed as the Corporation may designate) on such day (which is not a Legal Holiday as defined in Section 9(b)), or it there shall not have been a sale on such day, on the basis of the average of the bid and asked quotations therefor on such exchange on such day, or if the Common Stock shall not then be listed on any exchange, at the highest bid quotation in the over-the-counter market on such as reported by National Quotation Bureau, Incorporated or similar quotation service. 15 (E) No adjustment in the conversion price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this subsection (E) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 9 shall be made to the nearest cent or to the nearest one-thousandth of a share, as the case may be. Anything in this Section 9(d), to the contrary notwithstanding, the Corporation shall be entitled to make such reductions in the conversion price, in additional to those required by this Section 9(d), as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, distribution of rights to purchase stock or securities, or a distribution of securities convertible into or exchangeable for stock hereafter made by the Corporation to its stockholders shall not be taxable. The Board of Directors shall have the power to resolve any ambiguity or correct any error in this Section 9(d) and to authorize the filing of a Certificate of Correction with respect to any such ambiguity or error. (F) Whenever the conversion price is adjusted, as herein provided, the Corporation shall promptly file with the transfer agent of the Preferred Stock an Officers' Certificate setting forth the conversion price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Promptly after delivery of such certificate, the Corporation shall prepare a notice of such adjustment of the conversion price setting forth the adjusted conversion price and the date on which such adjustment becomes effective and shall mail such notice of such adjustment of the conversion price to the holders of Preferred Stock at their address as appearing in the stock transfer books of the Corporation. (G) In any case in which this Section 9(d) provides that an adjustment shall become effective immediately after a record date for an event, the Corporation may defer until the occurrence of such event (i) issuing to the holder of any shares of Preferred Stock converted after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (ii) paying to such holder any amount in cash in lieu of any fraction pursuant to Section 9(c). 16 (H) The Corporation at any time may reduce the Conversion Price, temporarily or otherwise, by any amount but in no event shall such Conversion Price be less than the par value of the Common Stock at the time of such reduction is made. Whenever the Conversion Price is reduced pursuant to this paragraph (H), the Corporation shall mail to the holders of shares of Preferred Stock a notice of the reduction. The Corporation shall mail the notice at least 15 days before the date the reduced Conversion Price takes effect. The notice shall state the reduced Conversion Price and the period in which it will be in effect. A reduction in the Conversion Price pursuant to this paragraph (H) shall not change or affect the Conversion Price otherwise in effect for purposes of paragraphs A, B and C of this Section 9 (d). (e) Reclassification, Consolidation, Merger or Sale of Assets. In case of any reclassification of the Common Stock, any consolidation of the Corporation with, or merger of the Corporation into, any other person, any merger of another person into the Corporation (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of the Corporation), any sale or transfer of all or substantially all of the assets of the Corporation or any compulsory share exchange pursuant to which share exchange the Common Stock is converted into other securities, cash or other property, then lawful provision shall be made as part of the terms of such transaction whereby the holder of each share of Preferred Stock then outstanding shall have the right thereafter, during the period such share shall be convertible, to convert such share only into the kind and amount of securities, cash and other property receivable upon such reclassification, consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of Common Stock of the Corporation into which such share of Preferred Stock might have been converted immediately prior to such reclassification, consolidation, merger, sale, transfer or share exchange assuming such holder of Common Stock of the Corporation (i) is not a person with which the Corporation consolidated or into which the Corporation merged or which merged into the Corporation, to which such sale or transfer was made or a party to such share exchange, as the case may be ("constituent person"), or an affiliate of a constituent person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such reclassification, consolidation, merger, sale, transfer or share exchange (provided that if the kind or amount of securities, cash and other property receivable upon such 17 reclassification, consolidation, merger, sale, transfer or share exchange is not the same for each share of Common Stock of the Corporation held immediately prior to such consolidation, merger, sale or transfer by others than a constituent person or an affiliate thereof and in respect of which such rights of election shall not have been exercised (" non-electing share"), then the kind and amount of securities, cash and other property receivable upon such reclassification, consolidation, merger, sale, transfer or share exchange by each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). The Corporation, the person formed by such consolidation or resulting from such merger or which acquires such assets or which acquires the Corporation's shares, as the case may be, shall make provisions in its certificate or articles of incorporation or other constituent document to establish such right. Such certificate or articles of incorporation or other constituent document shall provide for adjustments which, for events subsequent to the effective date of such certificate or articles of incorporation or other constituent document, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 9. The above provisions shall similarly apply to successive reclassifications, consolidations, mergers, sales, transfers or share exchanges. (f) Taxes on Shares Issued. The issue of stock certificates on conversions of Preferred Stock shall be made without charge to the converting holder of Preferred Stock for any tax in respect of the issue thereof. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of stock in any name other than that of the holder of any Preferred Stock converted, and the Corporation shall not be required to issue or deliver any such stock certificate unless and until the person or persons requesting the issue thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. (g) Reservation of Shares; Shares to Be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock. The Corporation shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Preferred Stock and shall take all such corporate action as may be required from time to time in order that it may validly and legally issue fully paid and non-assessable shares of Common Stock upon conversion of the Preferred Stock. Before taking any action which would cause an adjustment reducing the 18 conversion price below the then par value, if any, of the shares of Common Stock issuable upon conversion of the Preferred Stock, the Corporation will take all corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue shares of such Common Stock at such adjusted conversion price. All share of Common Stock which may be issued upon conversion of Preferred Stock will upon issue be fully paid and nonassessable by the Corporation and free from all taxes, liens and charges with respect to the issue thereof. If any share of Common Stock to be provided for the purpose of conversion of Preferred Stock hereunder require registration with or approval of any governmental authority under any Federal or state law before such shares may be validly issued upon conversion, the Corporation will in good faith and as expeditiously as possibly endeavor to secure such registration or approval, as the case may be. So long as the Common Stock shall be listed on the New York Stock Exchange or any other national securities exchange the Corporation will, if permitted by the rules of such exchange, list and keep listed and for sale so long as the Stock issuable upon conversion of the Preferred Stock. (h) Notice to Holder Prior to Certain Actions. In case: (A) the Corporation shall declare a dividend (or any other distribution) of its Common Stock (other than in cash out of retained earnings); or (B) the Corporation shall authorize the granting to the holders of its Common Stock of rights or warrants to subscribe for or purchase any share of any class or any other rights or warrants; or (C) of any reclassification of the Common Stock of the Corporation (other than a subdivision or combination of its outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value) or, of any consolidation or merger to which the Corporation is a party and for which approval of any shareholders of the Corporation is required, or of the sale or transfer of all or substantially all of the assets of the Corporation; or (D) of the voluntary or involuntary dissolution, liquidation or winding 19 up of the Corporation; the Corporation shall cause to be filed with the transfer agent for the Preferred stock and to be mailed to each holder of Preferred Stock at their address appearing on the stock transfer books of the Corporation, as promptly as possible but in any event at least fifteen days prior to the applicable date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up. 10. Outstanding Shares. For purposes of this Certificate of Designation, all shares of Preferred Stock shall be deemed outstanding except (i) from the date fixed for redemption pursuant to Section 7 or 8 hereof, all shares of Preferred Stock that have been so called for redemption under Section 7 or have been required to be redeemed by the holder thereof under Section 8 if funds necessary for the redemption of such shares are available and shall have been irrevocably deposited or set aside and, in the case of a redemption under Section 8, have been deposited in trust with a bank having a combined capital and surplus in excess of $10,000,000, as trustee, for the benefit of the holders of such shares to be redeemed for payment of the relevant redemption price; (ii) from the date of surrender of certificates representing shares of Preferred stock, all shares of Preferred Stock converted into Common Stock; and (iii) from the date of registration of transfer, all shares of Preferred Stock held of record by the Corporation or any subsidiary of the Corporation. 11. Partial Payments. If at any time the Corporation does not pay amounts sufficient to redeem all Preferred Stock required to be redeemed by the Corporation at such time pursuant to Section 8 hereof, then such funds which are paid shall be applied to redeem such Preferred Stock as the Corporation may designate by lot. 12. Status of Acquired Shares. Shares of Preferred Stock redeemed by the Corporation, received upon conversion pursuant to Section 9 or 20 otherwise acquired by the Corporation will be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to class, and may thereafter be issued, but not as shares of Preferred Stock. 13. Preemptive Rights. The Preferred Stock is not entitled to any preemptive or subscription rights in respect of any securities of the Corporation. 14. Severability of Provisions. Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law. 15. Fractional Shares. The Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Preferred Stock. 16. Reversion to Corporation. Subject to applicable escheat laws, any monies set aside by the Corporation in respect of any payment with respect to shares of the Preferred Stock, or dividends thereon, and unclaimed at the end of two years from the date upon which such payment is due and payable shall revert to the general funds of the Corporation, after which reversion the holders of such shares shall look only to the general funds of the Company for the payment thereof. Any interest accrued on funds so deposited shall be paid to the Corporation from time to time. 21 IN WITNESS WHEREOF, Countrywide Credit Industries, Inc. has caused this certificate to be signed by Angelo R. Mozilo, its Executive Vice President, and its corporate seal to be hereunto affixed and attested by Sandor E. Samuels, its Secretary, this 11th day of July, 1990 COUNTRYWIDE CREDIT INDUSTRIES, INC. By: /s/ Angelo R. Mozilo ---------------------------------------- Name: Angelo R. Mozilo Title: Vice Chairman and Executive Vice President Attest: /s/ Sandor E. Samuels - ------------------------------------ Name: Sandor E. Samuels Title: Secretary 22 CERTIFICATE OF CORRECTION FILED TO CORRECT CERTAIN ERRORS IN THE CERTIFICATE OF DESIGNATION OF $23.75 CONVERTIBLE PREFERRED STOCK OF COUNTRYWIDE CREDIT INDUSTRIES, INC. FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE ON JULY 12, 1990 COUNTRYWIDE CREDIT INDUSTRIES, INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY: 1. The name of the Corporation is Countrywide Credit Industries, Inc. 2. A Certificate of Designation of $23.75 Convertible Preferred Stock (the "Certificate") was filed with the Secretary of State of Delaware on July 12, 1990 and said Certificate requires correction as permitted by subsection (f) of Section 103 of the General Corporation Law of the State of Delaware. 3. The inaccuracies or defects of said Certificate to be corrected are as follows: A. The words, ", as amended (including this Certificate of Designation)" should be inserted following the words "Restated Certificate of Incorporation" in the first sentence of Section 6(c) of the Certificate, so that the first sentence of Section 6(c) of the Certificate is corrected to read in its entirety as follows: (c) Class Voting Rights. In addition so long as any Preferred Stock is outstanding the Corporation shall not, without the affirmative vote or consent of the holders of at least 66-2/3 percent of all the outstanding shares of Preferred Stock voting separately as a class, (i) amend, alter or repeal any provision of the Restated certificate of Incorporation, as amended (including this Certificate of Designation) or the By-Laws of the Corporation so as adversely to affect the relative rights, preferences, qualifications, limitations or restrictions of the Preferred Stock, (ii) authorize, issue or increase the authorized amount of any class or series of stock, or any security convertible into stock of such class or series, ranking senior to the Preferred Stock as to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of the Corporation or (iii) effect any reclassification of the Preferred Stock. B. The words "Rating Decline" contained in the first sentence of Section 8 of the Certificate should be deleted and replaced with the words "Designated Event," so that the first sentence of Section 8 of the Certificate is corrected to read in its entirety as follows: 8. Contingent Redemption at Option of Holder. In the event that there occurs a Designated Event (as hereinafter defined) with respect to the Corporation, each holder of shares of Preferred Stock shall have the right, at the holder's option, to require the Corporation to redeem all or any part of such holder's shares of Preferred Stock on the date (the "Contingent Redemption Date" that is 100 days after the Designation Event, at $250.00 per share plus accrued and unpaid dividends to the Contingent Redemption Date. C. The word "Company" in the last sentence of Section 8 of the Certificate should be deleted and replaced with the word "Corporation" so that the last sentence of Section 8 of the Certificate is corrected to read in its entirety as follows: As used in the preceding paragraph, "Corporation" shall mean the Corporation or any holding company permitted under clause (ii) (a) thereof which may be created. D. The word "or" should be inserted in the second sentence of Section 9(e) of the Certificate so that the second sentence of Section 9(e) of the Certificate is corrected to read in its entirety as follows: 2 The Corporation, or the person formed by such consolidation or resulting from such merger or which acquires such assets or which acquires the Corporation's shares, as the case may be, shall make provisions in its certificate or articles of incorporation or other constituent document to establish such right. E. The words "Preferred Stock" in the second-to-last line of Section 12 of the Certificate should be deleted and replaced with the words "preferred stock of the Corporation" so that Section 12 of the Certificate is corrected to read in its entirety as follows: 12. Status of Acquired Shares. Shares of Preferred Stock redeemed by the Corporation, received upon conversion pursuant to Section 9 or otherwise acquired by the Corporation will be restored to the status of authorized but unissued shares of preferred stock of the Corporation, without designation as to class, and may thereafter be issued, but not as shares of Preferred Stock. 4. As of the date hereof, no shares of $23.75 Convertible Preferred Stock have been issued by the Corporation. 3 IN WITNESS WHEREOF, Countrywide Credit Industries, Inc. has caused this certificate to be signed by Angelo R. Mozilo, its Executive Vice President, and its corporate seal to be hereunto affixed and attested by Sandor E. Samuels, its Secretary, this 16th day of July, 1990. COUNTRYWIDE CREDIT INDUSTRIES, INC. By: /s/ ANGELO R. MOZILO --------------------------------------- Name: Angelo R. Mozilo Title: Vice Chairman and Executive Vice President Attest: /s/ SANDOR E. SAMUELS - ------------------------- Name: Sandor E. Samuels Title: Secretary 4 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF COUNTRYWIDE CREDIT INDUSTRIES, INC. Countrywide Credit Industries, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, hereby certifies as follows: 1. That at a meeting of the Board of Directors of Countrywide Credit Industries, Inc., (the "Corporation" or "company") resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling for the proposal to be presented to the shareholders of the Corporation at the next Annual Meeting of the Shareholders. The resolution setting forth the proposed amendment is as follows: RESOLVED, That the Company's Certificate of Incorporation be amended to Increase the authorized Common Stock, and for this purpose the Third article be amended to read as follows: THIRD: The aggregate number of shares which the Corporation shall have authority to issue is two hundred forty million (240,000,000) shares of Common Stock, of the par value of five cents ($.05) per share, and one million, five hundred thousand (1,500,000) shares of Preferred Stock, of the par value of five cents ($.05) per share. The Preferred Stock may be issued in one or more series at such time or times and for such consideration or considerations as the Board of directors may determine. With respect to the Preferred Stock, the Board of Directors of this Corporation is authorized to determine or alter the voting rights, dividend privileges, liquidation preferences, and all other rights, preferences, privileges, liquidation preferences, and all other rights, preferences, privileges and restrictions, including without limitation, conversion rights into Common Stock, granted to or imposed upon any wholly unissued series of Preferred Stock and, within the limitations or restrictions stated in any resolution of the Board of Directors originally fixing the number of shares of Preferred Stock constituting any series, to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series, to determine the designation of any series and to fix the number of shares of any series. 2. That thereafter, the Annual Meeting of the Stockholders, of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware on June 24, 1992, at which meeting the necessary number of shares as required by statue were voted in favor of the amendment. 3. That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said Countrywide Credit Industries, Inc. has cause this certificate to be signed by David S. Loeb, its President, and Sandor E. Samuels, its Secretary, this 25th day of June, 1992. BY: /s/ DAVID S. LOEB ----------------------------- David S. Loeb President ATTEST: /s/ SANDOR E. SAMUELS - -------------------------- Sandor E. Samuels Secretary CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED OFFICE AND OF REGISTERED AGENT It is hereby certified that: 1. The name of the corporation (hereinafter called the "corporation") is COUNTRYWIDE CREDIT INDUSTRIES, INC. 2. The registered office of the corporation within the State of Delaware is hereby changed to 32 Loockerman Square, Suite L-100, City of Dover 19901, County of Kent. 3. The registered agent of the corporation within the State of Delaware is hereby changed to The Prentice-Hall Corporation System, Inc., the business office of which is identical with the registered office of the corporation as hereby changed. 4. The corporation has authorized the changes hereinbefore set forth by resolution of its Board of Directors. Signed on 1/19, 1993. /s/ GWEN J. EELLS --------------------------------- Gwen J. Eells, Vice President Attest: /s/ PATRICIA I. POE - ---------------------------------- Patricia I. Poe Secretary COUNTRYWIDE CREDIT INDUSTRIES, INC CERTIFICATE OF DESIGNATIONS PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK I, Stanford L. Kurland, Senior Managing Director and Chief Operating Officer, of Countrywide Credit Industries, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), in accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY: That pursuant to the authority conferred upon the Board of Directors by the Restated Certificate of Incorporation, as amended, of the said Corporation, the said Board of Directors on January 26, 2000, adopted the following resolutions creating a series of 1,000,000 shares of Preferred Stock designated as Series B Cumulative Convertible Preferred Stock: RESOLVED, that, pursuant to the authority vested in the Board of Directors of the Corporation in accordance with the provisions of its Restated Certificate of Incorporation, as amended, a series of Preferred Stock of the Corporation be, and hereby is, created and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional or other special rights of the shares of such series, and the qualifications, limitations or restrictions thereon, are as follows: SECTION 1. DESIGNATION. The series of Preferred Stock established hereby shall be designated the "Series B Cumulative Convertible Preferred Stock" (the "Series B Convertible Preferred Shares") and the authorized number of Series B Convertible Preferred Shares shall be 1,000,000 shares. SECTION 2. DIVIDENDS. (a) Holders of outstanding Series B Convertible Preferred Shares will be entitled to received, when and as declared by the Board of Directors out of funds legally available therefore, cash dividend payments in the amount of the Dividend Yield on each Series B Convertible Preferred Share, payable quarterly for each of the quarters ending February, May, August and November of each year, payable on the last business day of each such quarter (each such date being hereinafter referred to as "Preferred Dividend Payment Date"). The first dividend shall be payable on the Preferred Dividend Payment Date during the quarter in which the Issuance Date falls. Each such dividend will be payable to holders of record as they appear on the stock books of the Corporation on such record dates, not less than 10 nor more than 50 days preceding the related Preferred Dividend Payment Date, as shall be fixed by the Board of Directors. Dividends on each Series B Convertible Preferred Share shall accrue on a daily basis and compound quarterly commencing on the Issuance Date for such share and continuing to, but not including, the Redemption Date, Change of Control Redemption Date or Conversion Date for such share (or other date on which such Series B Convertible Preferred Share is no longer outstanding) and accrued dividends for each quarterly dividend period shall accumulate as Unpaid Dividend Yield, to the extent not paid, on the Preferred Dividend Payment Date for the quarter in which they accrued. Dividend payments under this paragraph (a) shall accrue whether or not the Corporation shall have earnings, whether or not there shall be funds legally available for the payment of such dividends and whether or not such dividends are declared. The Unpaid Dividend Yield will earn interest until paid at the Interest Rate, compounded quarterly from the date payable until the date actually paid. (b) So long as any Series B Convertible Preferred Shares shall remain outstanding, no dividend (other than a dividend payable in shares of Common Stock or rights to obtain Common Stock or any class of capital stock of the Corporation which is junior to the Series B Convertible Preferred Shares) shall be declared, nor shall the Corporation make any other distribution or payment or set aside anything of value for distribution or payment on, or redeem, repurchase or otherwise acquire any shares of, the Common Stock of the Corporation or any other class of stock or series thereof ranking junior to the Series B Convertible Preferred Shares in the payment of dividends (other than a redemption or purchase of shares of Common Stock of the Corporation made for purposes of an employee incentive or benefit plan of the Corporation or any of its subsidiaries) unless the full amount of Unpaid Dividend Yield, if any, accumulated on all outstanding Series B Convertible Preferred Shares through all past Preferred Dividend Payment Dates plus accrued interest thereon shall have been paid in full and not refunded. No dividend shall be declared on any share or shares on any class of stock of the Corporation or series thereof ranking on a parity with the Series B Convertible Preferred Shares in respect of payment of dividends for any prior dividend payment period of said parity stock unless there shall have been declared on all shares then outstanding of the Series B Convertible Preferred Shares terminating with or before such prior dividend payment period of such parity stock, like proportional dividends determined ratably in proportion to the respective Unpaid Dividend Yield accumulated to date for all previous quarterly dividend periods on all outstanding Series B Convertible Preferred Shares and the dividends accumulated on all outstanding shares of said parity stock. (c) CHANGE IN TAX LAWS. (i) If because of an increase or decrease (up to and including full elimination), effective on or after January 1, 2000, of the dividends received deduction ("DRD") with respect to dividend payments on the Series B Convertible Preferred Shares presently permitted by any Tax Law (a "change in the DRD Tax Law"), corporate holders of Series B Convertible Preferred Shares ("Corporate Holders") would realize a greater or lesser after-tax yield from dividend payments on a Series B Convertible 2 Preferred Shares than would have been the case had such change in the DRD Tax Law not occurred (a positive or negative "Tax Effect," respectively), then a dividend adjustment shall be calculated on the Series B Convertible Preferred Shares (whether or not held by Corporate Holders) so that a Corporate Holder's net after-tax yield would be the same as if there has been no change in the DRD Tax Law. Calculation of the dividend adjustment pursuant to this paragraph (c) of Section 2 shall be made (1) without regard to any other changes in Tax laws except those affecting the deductibility of dividends received by Corporate Holders (including changes in the characterization of Series B Convertible Preferred Shares dividends which impact their deductibility under any DRD related Tax Law); and (2) assuming that Corporate Holders pay federal income tax at the highest marginal corporate income tax rate effective at January 1, 2000. (ii) For purposes of calculating the Preferred Dividend Yield Rate as set forth in Section 8 herein, any adjustment in dividends required pursuant to paragraph (c) (1) of this Section 2 shall be expressed as (1) the dividend payment required, after considering the change in DRD Tax law, to equalize a Corporate Holder's net after tax yield, expressed as a percentage (in decimals) of (2) dividends which would have accrued to such Corporate Holder had the change in DRD Tax law not occurred (such percentage to be referred to as the "Preferred Dividend Tax Adjustment Factor"). Therefore, if in equalization of any negative Tax Effect, the Corporation were required to pay $15.25 in extra dividends for each $100.00 of dividends that would have accrued and been payable without regard to any changes in the DRD Tax Law, the Preferred Dividend Tax Adjustment Factor would be 1.1525 ($115.25/$100.00). Conversely, if in equalization of any positive Tax Effect, the Corporation were entitled to pay $8.25 less in dividends for each $100.00 of dividends that would have accrued and been payable without regard to any changes in the DRD Tax Law, the Preferred Dividend Tax adjustment Factor would be 0.9175 ($91.75/$100.00). (iii) Upon the occurrence of any change in the DRD Tax Law resulting in a positive or negative Tax Effect, dividends accruing on each Series B Convertible Preferred Share shall be calculated using the Preferred Dividend Tax Adjustment Factor, effective as of the first day of the quarterly dividend period in which such change in the DRD Tax Laws become effective, or from the Issuance Date, if such Issuance Date occurred for such Series B Convertible Preferred Share from the date of adoption of this Certificate until the end of the quarterly dividend period in which the change in the DRD Tax Law occurred. Dividends calculated using the adjusted Preferred Dividend Yield Rate shall continue to be payable on the Preferred Dividend Payment Date immediately following the end of such quarterly dividend period. To the extent not paid on any Series B Convertible Preferred Share outstanding on the record date corresponding to the Preferred Dividend Payment Date for such quarterly dividend period, any additional dividend shall accumulate as Unpaid Dividend Yield of such share and shall remain a part thereof until (but only until) such additional dividend is paid. The Preferred Dividend Tax Adjustment Factor shall be calculated for each change in the DRD Tax Law resulting in a positive or negative Tax Effect. 3 SECTION 3. CASH REDEMPTION BY THE CORPORATION. (a) REDEMPTION AT OPTION OF CORPORATION. At any time, the Corporation may, at its option, with proper notice as set forth in paragraph (b) of this Section 3, redeem all of the outstanding Series B Convertible Preferred Shares, as of a Proposed Redemption Date Specified in the notice to holders, for cash in an amount equal to the Redemption Price per share. (b) NOTICE OF REDEMPTION. In order to properly effect the redemption of Series B Convertible Preferred Shares, the Corporation will provide notice to holders of record of the Series B Convertible Preferred Shares not less than forty-five (45) days prior to the Proposed Redemption Date. Such notice may be provided by registered mail, first class postage prepaid, to the holders of record of the Series B Convertible Preferred Shares at their respective addresses as the same shall appear on the books of the Corporation or any transfer agent for the Series B Convertible Preferred Shares, or by facsimile or telecopy, as set forth in paragraph (a) of Section 9 herein. Each such notice shall state, as appropriate: (1) the Proposed Redemption Date; (2) the total number of Series B Convertible Preferred Shares to be redeemed; (3) the Redemption Price; (4) the place or places where certificates for such shares are to be surrendered for redemption; and (5) that dividends on the Series B Convertible Preferred Shares to be redeemed will cease to accrue on the Proposed Redemption Date. Each holder of Series B Convertible Preferred Shares shall surrender the certificates evidencing such shares to the Corporation at the place designated in such notice and shall thereupon be entitled to receive the cash payable upon such redemption. If proper notice of redemption shall have been duly provided to holders of the Series B Convertible Preferred Shares in accordance with this paragraph (b), and payment therefor has been made or duly provided for, then, notwithstanding that the certificates evidencing any of such shares so called for redemption shall not have been surrendered, as of the close of business on the Redemption Date the shares represented thereby shall be deemed no longer outstanding, dividends with respect to such redeemed Series B Convertible Preferred Shares shall cease to accrue and all rights of the holder with respect to such Series B Convertible Preferred Shares shall forthwith cease and terminate, except for the right of the holders to receive the cash payable upon such redemption, without interest, upon surrender of the certificates therefor. (c) REVOCATION OF NOTICE TO REDEEM. The Corporation's election to redeem the Series B Convertible Preferred Shares pursuant to paragraph (a) of this Section 3 shall be revocable, and any notice to holders of Series B Convertible Preferred Shares provided in accordance with paragraph (b) of this Section 3 shall be subject to revocation or amendment by the Corporation. In order to properly effect the revocation or amendment of such notice, the Corporation will provide notice of its revocation or amendment, not less than one business day prior to the Proposed Redemption Date, to holders of record of the Series B Convertible Preferred Shares previously notified of the proposed redemption. Such notice may be provided in any of the manners permissible for providing notice of redemption under paragraph (b) of this 4 Section 3. Such notice of revocation or amendment shall clearly state that: (1) on the Proposed Redemption Date, the Corporation will not redeem any of the Series B Convertible Preferred Shares; and (2) dividends on the Series B Convertible Preferred Shares will continue to accrue on and after the Proposed Redemption Date without interruption. Notwithstanding the foregoing, in the event that a notice of conversion has been delivered in accordance with paragraph (e) of Section 4 below (which notice of conversion then remains unrevoked), the Corporation shall not issue a notice of redemption under paragraph (b) of this Section 3, or revoke a previously issued notice of redemption, within thirty (30 days prior to the Proposed Conversion Date set forth in such notice of conversion. (d) CHANGE OF CONTROL. Notwithstanding anything to the contrary in this Section 3, for a period of ninety (90) days after the occurrence of a Change of Control, any holder of Series B Convertible Preferred Shares shall be entitled, at the option of such holder, to cause all of the Series B Convertible Preferred Shares held by such holder to be redeemed by the Corporation for cash in the amount of the Redemption Price per share as of a Change of Control Redemption Date. To properly effect the redemption of any Series B Convertible Preferred Shares pursuant to this paragraph (d) of Section 3, the holder of Series B Convertible Preferred Shares shall provide notice to the Corporation not less than ten (10) business days prior to the proposed Change of Control Redemption Date. Such notice must be provided by first class, registered mail, postage prepaid, to the Corporation at its principal executive offices, or by facsimile or telecopy, at the address or number set forth in paragraph (a) of Section 9 herein. Each such notice shall state, as appropriate: (1) the proposed Change of Control Redemption Date; and (2) a statement setting forth the facts and circumstances under which the holder believes a Change of Control has occurred. The Corporation shall give notice of the occurrence of a Change of control to all holders of Series B Convertible Preferred Shares promptly upon the occurrence of such Change of Control. (e) CANCELLATION OF SHARES. All Series B Convertible Preferred shares redeemed by the Corporation as provided in this Section 3 (or otherwise acquired by the Corporation) shall be retired and thereupon restored to the status of authorized but unissued but unissued Series B Convertible Preferred Shares. SECTION 4. CONVERSION BY HOLDERS INTO COMMON STOCK. (a) RIGHT OF CONVERSION. At any time, on the terms and subject to the conditions set forth in this Section 4, any holder of Series B Convertible Preferred Shares shall be entitled, at the option of such holder, to cause any or all of such shares to be converted into shares of Common Stock of the Corporation at the conversion rate set forth in paragraph (c) of this Section 4, as of the Proposed Conversion Date specified in such holder's notice to the Corporation delivered pursuant to paragraph (d) of this Section 4. The minimum number of Series B Convertible Preferred Shares for which conversion may be elected by such holder shall be 100,000 or such lesser number which constitutes all of the outstanding Series B Convertible Preferred Shares held by such holder. 5 (b) PRIORITY OF CORPORATION'S RIGHT OF REDEMPTION. Notwithstanding paragraph (a) of this Section 4, no Series B Convertible Preferred Shares shall be converted on or after the close of business on any Redemption Date for which notice has been properly delivered in accordance with Section 3 hereof. The Corporation's right to redeem all shares of Series B Convertible Preferred Stock on or prior to any Proposed Conversion Date shall supersede any holder's right of conversion under this Section 4, whether or not such holder's notice of conversion was properly delivered prior to the Corporation's notice to redeem, so long as the Corporation's notice to redeem was properly delivered in accordance with Section 3 hereof at least forty-five (45) days prior to the Proposed Conversion Date and the Proposed Conversion Date is on or after the Proposed Redemption Date. (c) CONVERSION RATE. For purposes of conversion of Series B Convertible Preferred Shares to shares of Common Stock pursuant to this Section 4, each Series B Convertible Preferred Share shall be converted into the number of Common Stock shares resulting from dividing (i) the Original Value of such Series B Convertible Preferred Share plus Unpaid Dividend Yield to and including the Conversion Date, by (ii) the Conversion Price. The Conversion Price is subject to adjustment from time to time pursuant to paragraph (m) of this Section 4. (d) NOTICE OF CONVERSION. In order to properly effect the conversion of Series B Convertible Preferred Shares, the holder of such shares will provide notice to the Corporation not less than thirty (30) days prior to the Proposed Conversion Date. Such notice must be provided by first class, registered mail, postage prepaid, to the Corporation at its principal executive offices, or by facsimile or telecopy, at the address or number set forth in paragraph (a) of Section 9 herein. Each such notice shall state, as appropriate; (1) the Proposed Conversion Date; (2) the number of Series B Convertible Preferred Shares (which must be a whole number of shares) to be converted; and (3) the name or names in which such holder wishes the certificate or certificates for Common Stock and for any Series B Convertible Preferred Shares not to be so converted to be issued and the address to which such holder wishes delivery to be made of the new certificates to be issued upon conversion. A Notice of Conversion with a Proposed Conversion Date on or after a Proposed Redemption Date or provided less than thirty (30) days prior to the Proposed Conversion Date shall be of no force and effect. (e) REVOCATION OF NOTICE TO CONVERT. The right of any holder of Series B Convertible Preferred Shares electing to convert the Series B Convertible Preferred Shares pursuant to paragraph (a) of this Section 4 shall be fully or partially revocable, and any notice to the Corporation provided in accordance with paragraph (d) of this Section 4 shall be subject to revocation or amendment by the holder of the shares to which such notice relates. In order to properly effect the revocation or amendment of such notice, the holder shall provide notice to the Corporation of its revocation or amendment not less than three (3) business days prior to the Proposed Conversion Date. Such notice shall be provided in the same manner specified as permissible for providing notice of conversion under paragraph (d) of this Section 4, and shall clearly state that the holder of such Series B Convertible Preferred Shares will not 6 convert any of such shares, or if notice of partial revocation, the amended number of Series B Convertible Preferred Shares held by such holder that are to be converted. (f) SURRENDER OF SERIES B CONVERTIBLE PREFERRED SHARES. Any holder of Series B Convertible Preferred Shares desiring to convert any such shares into shares of Common Stock shall surrender the certificate or certificates representing the Series B Convertible Preferred Shares being converted, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto), at the principal executive office of the Corporation or the offices of the transfer agent for the Series B Convertible Preferred Shares or such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the Series B Convertible Preferred Shares by the Corporation or the transfer agent for the Series B Convertible Preferred Shares, accompanied by a copy of the written notice of conversion previously provided to the Corporation in accordance with paragraph (d) of this Section 4. (g) DELIVERY OF COMMON STOCK. Upon the effectiveness of a conversion of Series B Convertible Preferred Shares on the Conversion date for such shares, the Corporation, subject to the provisions of paragraph (i) of this Section 4 regarding fractional shares and paragraph (k) of this Section 4 regarding payment of taxes, shall issue and send by first-class mail, postage prepaid, to the holder thereof, or to such holder's designee, at the address designated by such holder a certificate or certificates for the number of whole shares of Common Stock to which such holder shall be entitled upon conversion. In case there shall have been surrendered a certificate or certificates representing Series B Convertible Preferred Shares only part of which are to be converted, the Corporation, subject to the provisions of paragraph (k) of this Section 4 regarding payment of taxes, shall issue and deliver to such holder or such holder's designee a new certificate or certificates for the number of Series B Convertible Preferred Shares which shall not have been converted. (h) EFFECTIVENESS OF CONVERSION. Any conversion of Series B Convertible Preferred Shares into shares of Common Stock made at the option of the holder thereof shall be effective immediately following the close of business on the Conversion Date. At and after the effective time on the Conversion Date, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock. (i) FRACTIONAL SHARES. No fractional shares of Common Stock shall be issued upon conversion of any series B Convertible Preferred Shares but, in lieu of any fraction of a share of Common Stock which would otherwise be issuable in respect of the aggregate number of Series B Convertible Preferred Shares surrendered for conversion at one time by the same holder, the Corporation shall pay an amount in cash equal to the same fraction of the Conversion Price (based on the Market Price at Conversion). (j) RESERVATION OF SHARES. The Corporation shall at all times reserve and keep available out of the authorized but unissued shares of Common Stock 7 the maximum number of shares of Common Stock into which all Series B Convertible Preferred Shares from time to time outstanding are convertible, but shares of Common Stock held in the treasury of the Corporation may in its discretion be delivered upon any conversion of Series B Convertible Preferred Shares. (k) TAXES. The Corporation shall pay any and all stock transfer and documentary stamp taxes that may be payable in respect of any issuance or delivery of shares of Common Stock or any other securities issued upon conversion of the Series B Convertible Preferred Shares pursuant hereto. The Corporation shall not, however, be required to pay any additional tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock or other securities in a name other than that in which the Series B Convertible Preferred Shares with respect to which such shares are issued were registered, or any payment to any person other than the registered holder thereof, and shall not be required to make any such issuance or delivery unless and until the person otherwise entitled to such issuance or payment has paid to the Corporation the amount of any such additional tax or has established, to the satisfaction of the Corporation, that such additional tax has been paid or is not payable. (l) CANCELLATION OF SHARES. All Series B Convertible Preferred Shares converted into shares of Common Stock, other capital stock or other securities of the Corporation as provided in this Section 4 (or otherwise acquired by the Corporation) shall be retired and thereupon restored to the status of authorized but unissued shares of preferred stock, par value $0.05 per share, undesignated as to series. (m) ADJUSTMENTS TO THE CONVERSION PRICE. The conversion Price shall be adjusted from time to time as follows: (i) In case the Corporation shall (x) subdivide its outstanding Common Stock, (y) combine its outstanding Common Stock into a smaller number of shares or (z) reclassify or reorganize its capital stock, the Conversion Price in effect immediately prior thereto shall be adjusted so that the holder of any Series B Convertible Preferred Shares thereafter surrendered for conversion shall be entitled to receive the number of shares of capital stock of the Corporation which he would have owned or have been entitled to receive after the happening of any of the events described above had such Series B Convertible Preferred Shares been converted immediately prior to the happening of such event. An adjustment made pursuant to this subsection (i) shall become effective immediately after the effective date in the case of subdivision, combination, reclassification or reorganization. (ii) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustment which by reason of this subsection (ii) is not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 4 shall be made to the nearest cent or to the nearest one-thousandth of a share, as the case may be. Anything in this Section 4(m) 8 to the contrary notwithstanding, the Corporation shall be entitled to make (but shall not be required to make) such reductions in the Conversion Price, in addition to those required by this Section 4(m), as it in its discretion shall determine to be advisable in order that any of the actions referred to in subsection (i) above shall not be taxable. Notwithstanding any provision to the contrary in this Section 4(m), in no event shall the Conversion Price be adjusted so that, after giving effect to such adjustment, the Conversion Price would be less than the par value, if any, of the common Stock. (iii) Whenever the Conversion Price is adjusted, the Corporation shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the date on which such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to the holders of Series B Convertible Preferred Shares at their address as appearing in the stock transfer books of the Corporation. (iv) In any case in which this Section 4(m) provides that an adjustment shall become effective immediately after a record date for an event, the Corporation may defer until the occurrence of such event (a) issuing to the holder of any Series B Convertible Preferred Shares converted after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (b) paying to such holder any amount in cash in lieu of any fraction pursuant to Section 4(i). SECTION 5. LIQUIDATION RIGHTS. (a) In the event of any Liquidation, after payment or provision for payment has been made for the debts and other liabilities of the Corporation, the holders of Series B Convertible Preferred Shares shall be entitled to receive, out of the net assets of the Corporation, for each Series B Convertible Preferred Share its Original Value plus an amount equal to the sum of Unpaid Dividend yield (whether or not declared) accrued and unpaid plus accrued interest thereon for all previous periods and the current period, whether or not accumulated, and no more. After such amount is paid in full, no further distributions or payments shall be made in respect of Series B Convertible Preferred Shares, such series B Convertible Preferred Shares shall no longer be deemed to be outstanding or be entitled to any other powers, preferences, rights or privileges, including voting rights, and such Series B Convertible Preferred Shares shall be surrendered for cancellation to the Corporation. (b) The full amount payable to the holders of Series B Convertible Preferred Shares shall be paid before any distribution shall be made to the holders of any class of common stock of the Corporation or any other class of stock or series thereof ranking junior to the series B Convertible Preferred Shares with respect to the distribution of assets upon a Liquidation. No payment on account of any Liquidation shall be made to the holders of any class or series of stock ranking on a parity with the Series B 9 Convertible Preferred Shares in respect of the distribution of assets upon Liquidation unless there shall likewise be paid at the same time to the holders of the Series B Convertible Preferred Shares like proportionate amounts determined ratably in proportion to the full amounts to which the holders of all outstanding Series B Convertible Preferred Shares and the holders of all outstanding shares of such parity stock are respectively entitled with respect to such distribution. (c) If the assets distributed to the holders of Series B Convertible Preferred Shares upon any Liquidation shall be insufficient to permit the payment to such holders of the full amount to which they are entitled in such circumstances, then such assets or the proceeds thereof shall be distributed among such holders ratably in proportion to the sums which would be payable to such holders if all sums were paid in full. (d) Once any payment required upon any Liquidation is made to any holder of Series B Convertible Preferred Shares, there shall not be any conversion rights in respect of such shares pursuant to Section 4 hereof unless the full amount of all such distributions and payments made in respect of such shares being converted is remitted to the Corporation prior to or concurrently with the conversion of such shares. (e) Neither the merger nor consolidation of the Corporation into or with any other corporation, nor the merger or consolidation of any other corporation into or with the Corporation, nor a sale, transfer or lease of all or any part of the assets of the Corporation, shall be deemed to be a Liquidation for purposes of this Section 5. (f) Written notice of any Liquidation, stating the payment date or dates when and the place or places where the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage prepaid, not less than thirty (30) days prior to any payment date stated therein, to the holders of record of the series B Convertible Preferred Shares at their respective addresses as the same shall appear on the books of the Corporation or any transfer agent for the Series B Convertible Preferred Shares. SECTION 6. VOTING RIGHTS. (a) General. The holders of the Series B Convertible Preferred Shares shall have no voting rights except as described below or as required by law. In exercising any such vote, each outstanding share of Series B Convertible Preferred Shares shall be entitled to one vote. (b) Class Voting Rights. So long as any Series B Convertible Preferred Share is outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of at least 50 percent of all the outstanding Series B Convertible Preferred Shares voting separately as a class, (i) amend, alter or repeal any provision of the Restated Certificate of Incorporation, as amended, or the By-Laws of the Corporation so as adversely to affect the relative rights, preferences, qualifications, limitations or restrictions of the Series B Convertible Preferred Shares, (ii) authorize, issue or increase the authorized amount of any class or series of stock, or any security convertible into 10 stock of such class or series, ranking senior to the Series B Convertible Preferred Shares as to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of the Corporation or (iii) effect any reclassification of the Series B Convertible Preferred Shares. SECTION 7. SINKING FUND. No sinking fund or other mechanism for the segregation of funds shall be established for the purpose of redemption or repurchase of the Series B Convertible Preferred Shares or payment of dividends thereon. SECTION 8. CERTAIN DEFINITIONS. For purposes of this Certificate of Designations, the following terms shall have the meanings set forth below. "AVERAGE MARKET PRICE" means, with respect to a share of Common Stock on any date of determination, the average of the daily Closing Prices for the thirty (30) consecutive calendar days ending on the date of determination without considering the Closing Price on non-Trading Days; provided, however, that in averaging the daily Closing Prices, all adjustments shall be made as are necessary to reflect any subdivision, reclassification, recapitalization or combination of, or dividend paid or distribution made on, shares of Common Stock during such period. "CHANGE OF CONTROL" means, with respect to the Corporation, (i) the acquisition of ownership (by any Person or "group" within the meaning of Sections 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended) of greater than 50% of the voting power of the capital stock of the Corporation (whether by sale or other transfer of capital stock, merger, consolidation or other reorganization or means, including a reorganization under bankruptcy or insolvency laws); or (ii) the consummation of a sale, transfer or other disposition of greater than 50% of the assets of the Corporation (determined on a combined and consolidated fair market value basis) in one or a series of related transactions to any Person or "group" that is not an affiliate of the Corporation. "CHANGE OF CONTROL REDEMPTION DATE" shall be the day designated by any holder of Series B Convertible Preferred Shares for redemption by the Corporation of all Series B Convertible Preferred Shares held by such holder, as set forth in the notice of such election, properly delivered in accordance with paragraph (e) of Section 3, following a Change of Control. "CLOSING PRICE" on any day shall mean the closing sales price regular way on such day for one share of Common Stock or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices regular way, in each case on the New York Stock Exchange, as reported in The Wall Street Journal. "COMMON STOCK" means common stock of the Corporation, par value $0.05 per share. "CONVERSION DATE" shall be the same day as the Proposed Conversion Date, provided that (i) the holder of Series B Convertible Preferred Shares requesting such conversion has not delivered a notice of revocation in accordance with paragraph (e) of 11 Section 4; and (ii) the Corporation has not properly delivered a notice of redemption pursuant to paragraph (b) of Section 3 naming any date on or prior to the Proposed Conversion Date as the Proposed Redemption Date and such notice to redeem has not been revoked prior to such date. Notwithstanding the foregoing, in the event that the holders of more than fifty percent (50%) of the outstanding Series B Convertible Preferred Shares hold registration rights with respect to Common Stock into which such Series B Convertible Preferred Shares can be converted, and such holders have delivered to the Corporation, concurrently with any notice of conversion under paragraph (d) of Section 4, a notice requesting registration of such Common Stock upon conversion in an underwritten securities offering, then the Conversion Date shall be delayed so that it occurs (i) on or after the effective date of such registration, and (ii) immediately prior to the purchase of such Common Stock by the underwriter(s) undertaking such offering. "CONVERSION PRICE" means, with respect to any Series B Convertible Preferred Share, the product of (i) 1.2 and (ii) the Average Market Price of the Common Stock at the time of the original purchase of such Series B Convertible Preferred Share. The Conversion Price is subject to adjustment from time to time pursuant to Section 4(m). "DEALER QUOTATION" means a quotation, expressed as an annual percentage rate, by a Reference Dealer as to the annual dividend rate that would be required to be paid on a series of perpetual convertible preferred stock issued for its stated value by the Corporation as of a date of determination. In determining such annual dividend rate, the Reference Dealer shall consider, without limitation, the annual dividend rate that other issuers, with similar credit ratings on outstanding debt to that of the Corporation and its principal subsidiary, would be required to pay on a series of perpetual convertible preferred stock issued for its stated value. "DIVIDEND YIELD" means, with respect to each Series B Convertible Preferred Share for each quarter, or such lesser period as may arise in connection with the issuance, redemption or conversion of such share, or with any Liquidation, the amount accruing on such share during the quarter, or such lesser period, at an annual rate equal to the Preferred Dividend Yield Rate, applied to such share's Original Value. Dividend Yield for any period shorter than a full quarterly dividend period shall be computed on the basis of a 360-day year of twelve 30-day months. Dividend Yield will begin accruing on each Series B Convertible Preferred Share on the Issuance Date of such share and shall accrue to, but not including, the Preferred Dividend Payment Date, the Redemption Date, Change of Control Redemption Date or Conversion Date for such share (or other date on which such Series B Convertible Preferred Share is no longer outstanding). "GAAP" means United States generally accepted accounting principles, consistently applied. "INTEREST RATE" means the prime rate of interest publicly announced from time to time by Citibank, N.A. plus 400 basis points. 12 "ISSUANCE DATE" means, for each Series B Convertible Preferred Share, the date on which such share was originally issued by the Corporation. "LIQUIDATION" means any dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary. "MARKET PRICE AT CONVERSION" means the Average Market Price of one share of Common Stock determined as of the Proposed Conversion Date. "ORIGINAL ISSUANCE DATE" means the date on which a Series B Convertible Preferred Share was originally issued by the Corporation. "ORIGINAL VALUE" of each Series B Convertible Preferred Share shall be equal to $100, as proportionally adjusted for all stock splits, stock dividends, and any other subdivisions, combinations, reclassifications, or recapitalization affecting the Series B Convertible Preferred Shares. "PERSON" means any individual, partnership, joint venture, corporation, limited liability company, association, joint stock company, trust, or unincorporated organization or association, or a government or any department or agency or political subdivision thereof. "PREFERRED DIVIDEND PAYMENT DATE" has the meaning set forth in paragraph (a) of Section 2. "PREFERRED DIVIDEND TAX ADJUSTMENT FACTOR" has the meaning set forth in paragraph (c) of Section 2. "PREFERRED DIVIDEND YIELD RATE" means an annual dividend rate equal to the sum of: (i) the average of the Dealer Quotations obtained by the Corporation from three Reference Dealers, plus (ii) 100 basis points. Such Preferred Dividend Yield Rate will be calculated by the Corporation as of the Original Issuance Date and each anniversary thereof and be provided by the Corporation to holders of Series B Convertible Preferred Shares in a written notice. Commencing on the first day of the thirty-seventh (37th) month after the Original Issuance Date, and on the first day following each twelve-month period thereafter, the Preferred Dividend Yield Rate shall be automatically increased by 50 basic points from that which would otherwise be applicable, provided that under no circumstances hereunder shall the Preferred Dividend Yield Rate be increased by this automatic mechanism by more than 200 basis points cumulatively. "PROPOSED CONVERSION DATE" shall mean the date on which a holder of Series B Convertible Preferred Shares proposes to convert any or all of such holder's Series B Convertible Preferred Shares, as set forth in its notice to the Corporation properly delivered in accordance with paragraph (d) of Section 4. 13 "PROPOSED REDEMPTION DATE" shall mean the date on which the Corporation proposes to redeem all of the Series B Convertible Preferred Shares, as set forth in its notice to holders of Series B Convertible Preferred Shares properly delivered in accordance with paragraph (b) of Section 3. "REDEMPTION DATE" shall be the same day as the Proposed Redemption Date, provided that (i) the Corporation has not withdrawn its intention to redeem the Series B Convertible Preferred Shares pursuant to paragraph (c) of Section 3; and (ii) proper provision for the payment of the Redemption Price to holders of Series B Convertible Preferred Shares being redeemed has been made in accordance with paragraph (b) of Section 3 by the close of business on the Proposed Redemption Date. "REDEMPTION PRICE" for each Series B Convertible Preferred Share shall be equal to the sum of (A) the Original Value, plus (B) Unpaid Dividend Yield plus accrued interest thereon to and including the Redemption Date or Change of Control Redemption Date on such share. "REFERENCE DEALER" means a dealer, selected from Goldman, Sachs & Co., Lehman Brothers, Merrill Lynch & Co. or Morgan Stanley Dean Witter, or any other nationally recognized dealer in convertible preferred stock and other similar securities, as designated by the Corporation. "TAX LAWS" means the Internal Revenue Code of 1986, as amended, or any other revenue statute of the United States or in any United States regulation, ruling, administrative interpretation or judicial or other official interpretation (including a change in the characterization of dividends on the Series B Convertible Preferred Shares) applicable to the Corporation and/or Corporate Holders. For purposes of paragraph (c) of Section 2, "Tax Laws" does not include the tax laws of any state, municipality or foreign jurisdiction, or any tax law relating to the computation of taxes or treatment of income, expenses or deductions, or characterization of the dividends on the Series B Convertible Preferred Shares under the Alternative Minimum Tax rules. "TRADING DAY" shall mean a date on which the New York Stock Exchange (or if the New York Stock Exchange is not the principal stock exchange on which the Common Stock is listed or admitted to trading, the principal national securities exchange on which the Common Stock is listed or admitted to trading) is open for the transaction of business. "UNPAID DIVIDEND YIELD" of any Series B Convertible Preferred Share means, for any particular quarterly period (or lesser period, as may arise in connection with the issuance, redemption or conversion of such shares, or payments on such shares in connection with any Liquidation), an amount equal to the excess, if any, of (A) the aggregate Dividend Yield accrued on such share in such period, over (B) the aggregate amount of cash dividends or distributions paid by the Corporation in satisfaction of Dividend Yield on such share for such period. SECTION 9. MISCELLANEOUS. 14 (a) Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed to have been given on the earlier of (a) the receipt thereof, or (b) five (5) days after mailing if sent by first class, registered mail, postage prepaid, if properly addressed or directed to such party at the appropriate address set forth below, or such address such party may designate by written notice to the other parties: (i) if to the Corporation to: Countrywide Credit Industries, Inc. 4500 Park Granada, MS: CH-11 Calabasas, California 91302-1613 Attn: Managing Director and Chief Financial Officer (818) 225-4028 - Fax with a copy to: Countrywide Credit Industries, Inc. 4500 Park Granada, MS: CH-11 Calabasas, California 91302-1613 Attn: Managing Director and General Counsel (818) 225-4055 - Fax with an additional copy to: LeBoeuf, Lamb, Greene & MacRae, L.L.P. 125 West 55th Street New York, New York 10019 Attn: Stephen Rooney (212) 424-8500 - Fax (ii) if to a holder of the series B Convertible Preferred Shares: to such holder at the address for such holder as listed in the stock record books of the Corporation (which may include the records of any transfer agent for the Series B Convertible Preferred Shares if appropriate). (b) In the event a holder of Series B Convertible Preferred Shares shall not by written notice designate the name to whom payment upon redemption of Series B Convertible Preferred Shares should be made or the address to which the certificate or certificates representing such shares, or such payment, should be sent, the Corporation shall be entitled to register such shares, and make such payment, in the name of the holder of such Series B Convertible Preferred Shares as shown on the records of the Corporation and send the certificate or certificates representing such shares, or such payment, to the address of such holder shown on the records of the Corporation. 15 (c) All payments in the form of dividends and distribution upon any Liquidation or otherwise made upon the Series B Convertible Preferred Shares and any other shares of stock ranking on parity with the Series B Convertible Preferred Shares with respect to such dividend or distribution shall be made pro rata, so that amounts paid per share on the Series B Convertible Preferred Shares and such other shares of stock shall in all cases bear to each other the same ratio that the required dividends, distributions or payments, as the case may be, payable per share on the Series B Convertible Preferred Shares and such other shares of stock bear to each other. (d) The Corporation may appoint, and from time to time discharge and change, a transfer agent for the Series B convertible Preferred Shares. RESOLVED FURTHER, that the proper officers of the Corporation be, and each of them hereby is, authorized to execute a Certificate of Designations with respect to the Series B Convertible Preferred Stock pursuant to Section 151 of the General Corporation Law of the State of Delaware and to take all appropriate action to cause such Certificate to become effective, including, but not limited to, the filing and recording of such Certificate with and/or by the Secretary of the State of Delaware. IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this 26th day of January, 2000. /s/Stanford L. Kurland ------------------------------------ Stanford L. Kurland Senior Managing Director and Chief Operating Officer Attest: /s/Sandor E. Samuels - ------------------------------- Sandor E. Samuels Managing Director, Legal, General Counsel and Secretary 16 AMENDED AND RESTATED CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES A PARTICIPATING PREFERRED STOCK Of COUNTRYWIDE CREDIT INDUSTRIES, INC. Pursuant to Section 151 of the General Corporation Law of the State of Delaware We, Sandor E. Samuels, Senior Managing Director, Legal, General Counsel and Secretary, and Susan E. Bow, Assistant Secretary, of Countrywide Credit Industries, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY: That (i) pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the said Corporation, the said Board of Directors on February 10, 1988, adopted a resolution creating a series of 250,000 shares of Preferred Stock designated as Series A Participating Preferred Stock have been issued. WE DO FURTHER HEREBY CERTIFY: That pursuant to the authority conferred upon by the Board of Directors by the Certificate of Incorporation of the said Corporation and Section 151(g) of the General Corporation Law of the State of Delaware, the said Board of Directors on November 15, 2001 adopted the following resolution amending the voting powers, preferences and relative participating, optional or other special rights of the shares of the Series A Participating Preferred Stock, and the qualification, limitations or restrictions thereof while keeping the designation of such series unchanged: RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of its Restated Certificate of Incorporation, that the series of Preferred Stock of the Corporation previously designated "Series A Participating Preferred Stock" remain so designated and that the terms thereof be amended so that the amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: Section 1. Designation and Amount. The shares of such series shall be designated as "Series A Participating Preferred Stock", par value $0.05 per share, and the number of shares constituting such series shall be 250,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Participating Preferred Stock to a number less than that of the shares then outstanding plus the number of shares issuable upon exercise of outstanding rights, options or warrants or upon conversion of outstanding securities issued by the Corporation. Section 2. Dividends and Distributions. (A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Participating Preferred Stock with respect to dividends, the holders of shares of Series A Participating Preferred Stock, in preference to the holders of shares of Common Stock, par value $0.05 per share (the "Common Stock"), of the Corporation and any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (or, in each case, if not a date on which the Corporation is open for business, the next succeeding business day) or such earlier date in any such month on which dividends on the Common Stock are payable (each such date being referred to herein as a "Quarterly Dividend Payment Date") commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $20.00 or (b) subject to the provision for adjustment hereinafter set forth, 2,000 times the aggregate per share amount of all cash dividends, and 2,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Participating Preferred Stock. In the event the Corporation shall at any time after November 15, 2001 (the "Rights Declaration Date") (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. A-2 (B) The Corporation shall declare a dividend or distribution on the Series A Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution, shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $20.00 per share on the Series A Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Participating Preferred stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Participating Preferred Stock in an amount less than the total amounts of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of shares of Series A Participating Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Participating Preferred Stock shall entitle the holder thereof to 2,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the A-3 denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided herein or by law, the holders of shares of Series A Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. (C) (i) If at any time dividends on any Series A Participating Preferred Stock shall be in arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a "default period") which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series A Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including holders of the Series A Participating Preferred Stock) with dividends in arrears in an amount equal to six (6) quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two (2) Directors. (ii) During any default period, such voting right of the holders of Series A Participating Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that neither such voting right nor the right of the holders of any other series of Preferred Stock, if any, to increase, in certain cases, the authorized number of Directors shall be exercised unless the holders of ten percent (10%) in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such right is exercised at an annual meeting, to elect two (2) Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Participating Preferred Stock. A-4 (iii) Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than ten percent (10) of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice-President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders. (iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Preferred Stock shall have exercised their right to elect two (2) Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. (v) Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of Directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the Certificate of Incorporation or By-laws irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however to change thereafter in any manner provided by law or in the Certificate of Incorporation or By-laws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors. A-5 (D) Except as set forth herein, holders of Series A Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distribution, whether or not declared, on shares of Series A Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock, except dividends paid ratably on the Series A Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Participating Preferred Stock; (iv) purchase or otherwise acquire for consideration any shares of Series A Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and A-6 preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. Reacquired Shares. Any shares of Series A Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution, or winding up) to the Series A Participating Preferred Stock unless, prior thereto, the holder of shares of Series A Participating Preferred Stock shall have received $70,000 per share, plus an amount equal to accrued and unpaid dividends and distribution thereon, whether or not declared, to the date of such payment (the "Series A Liquidation Preference"). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 2,000 (as appropriately adjusted as set forth in subparagraph C below to reflect such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock)(such number in clause (ii), the "Adjustment Number"). Following the payment of the full amount of Series A Participating Preferred Stock and Common Stock, respectively, holders of Series A Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ration of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. (B) In the event there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. A-7 In the event there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. (C) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 2,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that are outstanding immediately prior to such event. Section 8. No Redemption. The shares of Series A Participating Preferred Stock shall not be redeemable. Section 9. Ranking. The Series A Participating Preferred Stock shall rank junior to all other series of the Corporation's Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. Section 10. Amendment. The Certificate of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of A-8 the outstanding shares of Series A Participating Preferred Stock, voting separately as a class. Section 11. Fractional Shares. Series A Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holders fractional shares, to exercise voting rights, receive dividends, participate in distribution and to have the benefit of all other rights of holders of Series A Participating Preferred Stock. IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this 5th day of December, 2001. /s/Sandor E. Samuels ------------------------------------- Sandor E. Samuels Senior Managing Director, Legal, General Counsel and Secretary Attest: /s/Susan E. Bow - --------------------------- Susan E. Bow Assistant Secretary A-9 CERTIFICATE OF OWNERSHIP AND MERGER OF CW MERGER CORP. A DELAWARE CORPORATION INTO COUNTRYWIDE CREDIT INDUSTRIES, INC. A DELAWARE CORPORATION (Pursuant to Section 253 of the Delaware General Corporation Law) Countrywide Credit Industries, Inc., a Delaware corporation organized and existing under the laws of the State of Delaware (the "Corporation"), does hereby certify that: FIRST: The Corporation was incorporated on December 2, 1986 pursuant to the General Corporation Law of the State of Delaware. SECOND: The Corporation is the owner of all of the issued and outstanding common shares of CW Merger Corp., a Delaware corporation incorporated on October 16, 2002, pursuant to the General Corporation Law of the State of Delaware. THIRD: The Corporation hereby merges CW Merger Corp. into the Corporation FOURTH: In a Telephonic Meeting of the Board of Directors of the Corporation on October 23, 2002, the Board of Directors adopted the following recitals and resolutions to merge CW Merger Corp. into the Corporation: WHEREAS, this Board of Directors has previously deemed it advisable and in the best interest of the Corporation to change its corporate name; and WHEREAS, it is proposed that CW Merger Corp., a Delaware corporation and wholly owned subsidiary of the Corporation be merged into the Corporation, with the Corporation being the surviving entity for the purpose of effectuating the name change; NOW THEREFORE, BE IT RESOLVED, That CW Merger Corp., a Delaware corporation ("CMC") merge and it hereby does merge into the Corporation pursuant to the provisions of Section 253 of the Delaware General Corporation Law and Sections 332 and 337 of the Internal Revenue Code of 1986, as amended (the "IRC"), with the Corporation being the surviving entity (the "Merger"); RESOLVED FURTHER, That the Merger be and it hereby is, approved and authorized; RESOLVED FURTHER, That the Merger shall become effective upon the filing of a Certificate of Ownership and Merger with the Secretary of State of the State of Delaware in accordance with the Delaware General Corporation Law (the "Effective Date"); RESOLVED FURTHER, That upon the Effective Date (i) the separate existence and corporate organization of CMC shall cease and the Corporation shall thereupon become the surviving corporation and shall continue its existence under Delaware Law, (ii) the Corporation shall assume all of the obligations and liabilities of CMC, and (iii) the issued and outstanding shares of stock of CMC shall not be converted in any manner, but each said share of stock which is issued as of the Effective Date shall be surrendered and cancelled; RESOLVED FURTHER, That upon the Effective Date, the name of the Corporation shall be changed to "Countrywide Financial Corporation" and ARTICLE FIRST of the Restated Certificate of Incorporation of the Corporation shall be amended to read as follows: "FIRST': The name of the corporation is Countrywide Financial Corporation". RESOLVED FURTHER, That, except for the foregoing amendment to ARTICLE FIRST, the Restated Certificate of Incorporation shall remain unchanged by the Merger and in full force and effect until further amended in accordance with the Delaware General Corporation Law; RESOLVED FURTHER, That the distribution of the assets of CMC pursuant to the Merger shall constitute a plan of complete liquidation of CMC and shall in all particulars conform to the requirements of Sections 332 and 337 of the IRC; RESOLVED FURTHER, That the officers of the Corporation be, and they hereby are, authorized, empowered and directed for and on behalf of the Corporation and in its name (i) to execute and file or cause to be filed with the Delaware Secretary of State a Certificate of Ownership and Merger evidencing the Merger pursuant to which the Corporation will change its name as described above, (ii) to cause to be filed certificates evidencing the Merger and change of name with such other states where the Corporation is qualified to do business as may require a filing evidencing the Merger or change of name, and (iii) to execute and file or cause to be filed any such other documents as may require a filing evidencing the Merger or change of name, RESOLVED FURTHER, That all actions taken and documents executed by the officers or other authorized representative of the Corporation, or any person or persons designated and authorized to act by any of them, prior to the adoption of these resolutions in connection with the transaction described above, are hereby ratified, confirmed, approved and adopted in all respects; and RESOLVED FURTHER, That the officers of the Corporation, and any of them, be, and each of them hereby is, authorized, empowered and directed to do or cause to be done all such 2 acts or things and to sign and deliver, or cause to be signed and delivered all such further agreements, documents, instruments and certificates, required or permitted to be given or made in connection with the Merger and the change of name, in the name and on behalf of the Corporation or otherwise (including without limitation any written consents as the sole stockholder of CMC), as such officer or officers of the Corporation executing the same shall deem necessary, advisable or appropriate to carry out the purposes and intent of the foregoing resolutions with such changes, additions and modifications thereto and any supplements or amendments thereof, as such officers executing and/or delivering the same have approved, such approval to be conclusively evidenced by such officer's execution and delivery thereof and to perform the obligations of the Corporation. IN WITNESS WHEREOF, the Corporation has caused this certificate to be executed by its duly authorized officer this 7th day of November, 2002. COUNTRYWIDE CREDIT INDUSTRIES, INC. a Delaware corporation By: /s/Sandor E. Samuels ------------------------------------ Sandor E. Samuels, Senior Managing Director, Legal, General Counsel & Secretary 3 CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF COUNTRYWIDE FINANCIAL CORPORATION COUNTRYWIDE FINANCIAL CORPORATION, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation" or the "Company"), hereby certifies as follows: 1. That at a meeting of the Board of Directors of the Corporation resolutions were duly adopted setting forth a proposed amendment of the Restated Certificate of Incorporation, declaring said amendment to be advisable and calling for the proposal to be presented to the stockholders of the Corporation at a Special meeting of the Stockholders. The resolution setting forth the proposed amendment is as follows: RESOLVED, That the Restated Certificate of Incorporation of the Company be amended to increase the authorized Common Stock and for this purpose Article Third thereof shall be struck out in its entirety and shall be replaced with the following new Article Third: "THIRD: The aggregate number of shares which the Corporation shall have authority to issue is five hundred million (5,000,000) shares of Common Stock, of the par value five cents ($0.05) per share, and one million five hundred thousand (1,500,000) shares of Preferred Stock, of the par value of five cents ($0.05) per share. The Preferred Stock may be issued in one or more series at such time or times and for such consideration or considerations as the Board of Directors may determine. With respect to the Preferred Stock, the Board of Directors of this Corporation is authorized to determine or alter the voting rights, dividend privileges, liquidation preferences, and all other rights, privileges and restrictions, including without limitation, conversion rights into Common Stock granted to or imposed upon any wholly unissued series of Preferred Stock and, within the limitations or restrictions stated in any resolution of the Board of Directors originally fixing the number of shares of Preferred Stock constituting any series, to increase or decrease (but not below the number of shares of such series the outstanding) the number of shares of any such series subsequent to the issue of shares of that series, to determine the designation of any series and to fix the number of shares of any series." 2. That thereafter, a Special Meeting of the Stockholders of the Corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware of January 9, 2004, at which special meeting the necessary number of shares as required by statute were voted in favor of the amendment of the Restated Certificate of Incorporation herein certified. 3. That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said Corporation has caused this certificate to be executed by an authorized officer on this 9th day of January, 2004. By: /s/Angelo R. Mozilo ---------------------------------- Angelo R. Mozilo Chairman of the Board and CEO 1 EX-10.84 3 v98358exv10w84.txt EXHIBIT 10.84 EXHIBIT 10.84 FIRST AMENDMENT TO SECOND RESTATED EMPLOYMENT AGREEMENT THIS FIRST AMENDMENT (the "Amendment") is made and entered into as of January 1, 2004 by and between Countrywide Financial Corporation, a Delaware corporation (the "Employer") and Stanford L. Kurland ("Officer"). WITNESSETH: WHEREAS, the Officer and Employer entered into a Second Restated Employment Agreement dated February, 28, 2003 (the "Employment Agreement"); and WHEREAS, the Officer and Employer wish to amend the Employment Agreement to reflect the Officer's new title, salary and perquisites; to provide for incentives based on Earnings Per Share ("EPS"); and, to extend the Term of the Employment Agreement; NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows: 1. Section 1, "Term," is hereby deleted and new Section 1 is inserted in its place as follows: "1. Term. Employer agrees to employ Officer and Officer agrees to serve Employer, in accordance with the terms hereof, for a term beginning on the Effective Date (as Defined in Section 8(c) hereof) and ending on December 31, 2008 (the "Expiration Date"), unless earlier terminated in accordance with the provisions hereof." 2. Section 2, "Specific Position; Duties and Responsibilities, is hereby deleted and new Section 2 is inserted in its place as follows: "2. Specific Position; Duties and Responsibilities. Employer and Officer hereby agree that, subject to the provisions of this Agreement, Employer will employ Officer and Officer will serve Employer as Executive Managing Director, President and Chief Operating Officer of Employer and as Chief Executive Officer of Home Loans. Except as set forth in Section 5(d)(ii) hereof, Employer agrees that Officer's duties hereunder shall be the usual and customary duties of such offices or such other duties as may be designated from time to time by the Board consistent with his status as an executive officer of Employer. Any such duties shall be consistent with the provisions of the charter documents of Employer or applicable law. Officer shall have such executive power and authority as shall reasonably be required to enable him to discharge his duties in the offices that he may hold. All compensation paid to Officer by Employer or any of its subsidiaries shall be aggregated in determining whether Officer has received the benefits provided for herein. 3. Section 4(a), "Base Salary," is hereby deleted and new Section 4 is inserted in its place as follows: "(a) Base Salary. (i) Effective January 1, 2004, Employer shall pay to Officer a base salary at the annual rate of $1,390,000 (the "Annual Rate"). In respect of the Fiscal Years ending in 2004, 2005, 2006, 2007 and 2008, the Compensation Committee of the Board (the "Compensation Committee") shall determine the annual increase in the Annual Rate, if any, based upon the recommendation of Angelo R. Mozilo (or, if he is no longer the Chairman of Employer, the then-serving Chairman of Employer). Any such increase shall be effective not later than April 1 of the Fiscal Year in which the increase is granted. Notwithstanding the foregoing, all amounts payable under this Section 4(a) that Employer reasonably determines not to be tax deductible under section 162(m) of the Internal Revenue Code and the regulations promulgated thereunder (the "Code"), shall automatically be deferred under the terms of the Employer's Deferred Compensation Plan, as may be amended or replaced (the "Deferred Compensation Plan"), until such time that Officer is no longer employed by Employer or any of its subsidiaries. For purposes of this Agreement, the term "Fiscal Year" shall mean the period beginning on January 1 and ending on December 31 during the term of this Agreement." 4. Section 4(c), Equity Incentive Compensation, is hereby amended by renumbering Section 4(c) to Section 4(c)(i) and inserting a new subsection 4(c)(ii) following 4(c)(i) as follows: "(ii) Employer shall grant to Officer equity incentive compensation in the form of an option to purchase 200,000 shares of Employer's common stock (the "Special Option Incentive"). The Special Option Incentive shall be granted on April 1, 2004 and such grant shall vest on October 1, 2008 unless sooner vested pursuant to the terms and conditions of an Option Agreement approved by the Compensation Committee substantially in the form of Appendix C. 5. Section 4(h), "Country Club Memberships," is hereby deleted in its entirety and a new Section 4(h) is inserted in its place as follows: "(h) Country Club Membership. Employer shall pay or cause to be paid, on Officer's behalf, the full amount of membership fees for two country clubs as the Officer may designate. In addition, Employer shall reimburse Officer for all monthly club dues as well as for any Employer-related charges in accordance with Employer's normal policy regarding expense reimbursement." [THE NEXT PAGE IS THE SIGNATURE PAGE] IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. COUNTRYWIDE FINANCIAL CORPORATION By: /s/Thomas H. Boone ------------------- Title: Senior Managing Director and Chief Administrative Officer OFFICER: /s/ Stanford L. Kurland ----------------------- Stanford L. Kurland, in his individual capacity APPENDIX C COUNTRYWIDE FINANCIAL CORPORATION PERFORMANCE VESTED NON-QUALIFIED STOCK OPTION AGREEMENT This "Agreement" is made as of April 1, 2004 between Countrywide Financial Corporation (the "Company") and you (the "Optionee"). The Option granted pursuant to this Agreement is not intended to be treated as an incentive stock option under section 422 of the Internal Revenue Code (the "Code"). In accordance with the Countrywide Financial Corporation 2000 Equity Incentive Plan (the "Plan"), the Company has granted to the Optionee an Option to purchase all or any part of the number of shares common stock, par value $.05 per share ("Option Shares"), of the Company, as set forth on the Option Statement (the "Statement") linked electronically hereto upon the terms and conditions described in this Agreement, the Statement and the Plan. Capitalized terms not defined herein shall have the meaning ascribed to them in the Plan. 1. (A) GRANT AND VESTING OF OPTION. This Agreement along with the Statement evidences the Company's grant to the Optionee on the date stated above (the "Grant Date"), the right and option to purchase, on the terms and conditions described in this Agreement and in the Plan, all or any part of the number of Option Shares of common stock, at the price per share described in the Statement (the "Option") subject to the provisions of this Agreement and the Plan. The Option shall become exercisable if, and only if, both (i) the employee is employed by the Company on the vesting date and (ii) the Earnings Per Share ("EPS") goals of the Company have been attained pursuant to the following schedule:

* provided Cumulative EPS Goals are achieved The Option shall become fully exercisable on October 1, 2008 whether or not the Cumulative EPS Goals have been achieved. The Option shall expire at 5:00 p.m., central time, on the fifth anniversary of the Grant Date (the "Expiration Date"). 2. METHOD OF EXERCISE. The exercise price of an Option shall be paid in the form of one or more of the following, as the Committee may specify, either through the terms of this Agreement or at the time of exercise of an Option: (a) cash or certified or cashiers' check, (b) shares of capital stock of the Company that have been held by the Optionee for at least six (6) months, (c) other property deemed acceptable by the Committee, or (d) any combination of (a) through (c). 3. TERMINATION OF OPTION AND ACCELERATION OF VESTING. (A) EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE. An Option shall terminate upon or following an Optionee's termination of employment with the Company and its Subsidiaries as follows: (i) In the event an Optionee's employment terminates for any reason other than death, Disability, Cause or Retirement, then the Optionee may at any time within three (3) months after his or her termination of employment and service as Nonemployee Director, exercise an Option to the extent, and only to the extent, the Option or portion thereof was exercisable at the date of such termination. (ii) in the event the Optionee's employment terminates, other than as a result of death or Cause, and the Optionee returns to employment with the Company within three (3) months after the termination, the termination will have no effect on the Option and the Optionee shall have the same number of shares and the same vesting schedule set forth in this Agreement; (iii) In the event the Optionee's employment terminates as a result of Disability, then the Optionee may at any time within one (1) year after such termination exercise such Option to the extent, and only to the extent, the Option or portion thereof was exercisable on the date of termination. (iv) In the event an Optionee's employment terminates for Cause, the Option shall terminate immediately and no rights thereunder may be exercised. (v) In the event an Optionee dies while an employee of the Company or any Subsidiary or within three (3) months after termination as described in clause (i) above or within one (1) year after termination as a result of Disability as described in clause (iii) above or Retirement under clause (vi) below, then the Option may be exercised at any time within one (1) year after the Optionee's death by the person or persons to whom the Optionee's rights pass by transfer or Beneficiary Designation, as the case may be, or, absent such a transfer or Beneficiary Designation, as the case may be, by the person or persons to whom such rights under the Option shall pass by will or the laws of descent and distribution; provided however, that an Option may be exercised to the extent, and only to the extent, that the Option or portion thereof was exercisable on the date of death or earlier termination. (vi) In the event an Optionee's employment terminates as a result of Retirement, the Optionee may at any time within one (1) year after termination of service by reason of Retirement, exercise such Options to the extent, and only to the extent, the Options or portion thereof was exercisable at the date of such termination. (B) EFFECT OF A CORPORATE CHANGE. In the event of a Corporate Change, (1) all Options outstanding on the date of such Corporate Change shall become immediately and fully exercisable and (2) an Optionee shall be permitted to surrender for cancellation within sixty (60) days after such Corporate Change, any Option or portion of an Option to the extent not yet exercised and the Optionee will be entitled to receive a cash payment in an amount equal to the excess, if any, of (x) the greater of (i) the Fair Market Value, on the date preceding the date of surrender of the Option Shares subject to the Option or portion thereof surrendered, or (ii) the Adjusted Fair Market Value of the Option Shares subject to the Option or portion thereof surrendered over (y) the aggregate purchase price for such Option Shares under the Option or portion thereof surrendered; provided however, that in the case of an Option granted within six (6) months prior to the Corporate Change to any Optionee who may be subject to liability under Section 16(b) of the Exchange Act, such Optionee shall be entitled to surrender for cancellation his or her Option during the sixty (60) day period commencing upon the expiration of six (6) months from the date of grant of any such Option. 4. NON-TRANSFERABILITY OF OPTION. The Option or portion thereof may be transferable or assignable to a member or members of the Optionee's "immediate family," as such term is defined in Rule 16a-1(e) under the Exchange Act, or to a trust for the benefit solely of a member or members of the Optionee's immediate family, or to a partnership or other entity whose only owners are members of the Optionee's immediate family (such transferee being a "Participant"), subject to the terms and conditions of the Plan. No Option granted under the Plan, nor any interest in such Option, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner , other than pursuant to the Beneficiary Designation, by will or the laws of descent and distribution or pursuant to a qualified domestic relations order. 5. RIGHTS OF THE OPTIONEE. No Optionee shall be deemed for any purpose to be the owner of any Option Shares subject to any Option unless and until (a) the Option shall have been exercised pursuant to the terms thereof, (b) the Company shall have issued and delivered the Option Shares to the Optionee and (c) the Optionee's name shall have been entered as a stockholder of record on the books of the Company. Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such Option Shares. 6. ADJUSTMENT. If the outstanding shares of common stock or other securities of the Company, or both, for which an Option is then exercisable or as to which an Option is to be settled shall at any time be changed or exchanged by declaration of a stock dividend, stock split or reverse stock split, combination of shares, recapitalization, or reorganization, the Committee or the Board shall appropriately and equitably adjust the number and kind of shares of common stock or other securities which are subject to the Plan or subject to any Options theretofore granted, and the exercise or settlement prices of such Options, so as to maintain the proportionate number of shares or other securities without changing the aggregate exercise or settlement price; provided, however, that such adjustment shall be made only to the extent that such adjustment will not affect the status of an Option intended to qualify as "performance based compensation" under Code section 162(m). If the Company recapitalizes or otherwise changes its capital structure, or merges, consolidates, sells all of its assets or dissolves (each of the foregoing a "Fundamental Change"), then thereafter upon any exercise of Options theretofore granted, the Optionee or Participant shall be entitled to purchase under such Options, in lieu of the number of shares of common stock as to which such Options shall then be exercisable, the number and class of shares of stock, securities, cash, property or other consideration to which the Optionee or Participant would have been entitled pursuant to the terms of the Fundamental Change if, immediately prior to such Fundamental Change, the Optionee or Participant had been the holder of record of the number of shares of common stock as to which such Option is then exercisable. 7. WITHHOLDING. Subject to limitations set forth in the Plan, the Company shall have the right to deduct from any distribution of cash to any Optionee, an amount equal to the federal, state and local income taxes and other amounts as my be required by law to be withheld (the "Withholding for Taxes") with respect to any Option. If an Optionee is entitled to receive Option Shares upon exercise of an Option, the Optionee shall pay the Withholding for Taxes to the Company prior to the issuance of such Option Shares. Notwithstanding the preceding sentence, all or any portion of the taxes required to be withheld by the Company or, if permitted by the Committee, desired to be paid by the Optionee, in connection with the exercise of a Nonqualified Option, at the election of the Optionee or Participant, may be paid by the Company by withholding shares of the Company's capital stock otherwise issuable or subject to an Option, or by the Optionee or Participant delivering previously owned shares of the Company's capital stock, in each case having a Fair Market Value equal to the amount required or elected to be withheld or paid. Any such election is subject to such conditions or procedures as may be established by the Committee and may be subject to disapproval by the Committee. 8. AMENDMENTS AND TERMINATION. The Board (or a duly authorized committee of the Board) may amend, alter or discontinue the Plan at any time but, except as provided pursuant to the anti-dilution adjustment of the Plan, no such amendment shall, without the approval of the stockholders of the Company: (a) increase the maximum number of shares of common stock for which Options may be granted under the Plan; (b) reduce the price at which Options may be granted below the price provided for in Section 6.2 of the Plan; (c) reduce the exercise price of outstanding Options; (d) extend the term of this Plan; (e) change the class of persons eligible to be Participants; (f) impair the rights of any Optionee without such holder's consent. 9. BENEFICIARY DESIGNATION. The Optionee may file with the Company a written designation of a beneficiary or beneficiaries under the Plan on the form found in the Benefits Bookstore on HR Cafe and may from time to time revoke or amend any such designation. Any designation of beneficiary shall be controlling over any other disposition, testamentary or otherwise. Designating a beneficiary to exercise the Option at death may in some jurisdictions (e.g., California) enable the Optionee to avoid the inclusion of Options in the Optionee's probate estate at death. Such Options will, however, still be included in the Optionee's estate for estate tax purposes. If the Optionee does not make any designation, then the Optionee's Options will pass by will or by applicable laws of descent and distribution. 10. OPTIONEE STATEMENT AND MODIFICATIONS. The Option granted to the Optionee under this Agreement, the Grant Date, and its exercise price and vesting schedule with respect thereto, shall be set forth on the Statement. The Optionee hereby acknowledges and agrees that the Statement may be revised from time to time by the Company to reflect additional grants of Options, exercises of Options and any permitted modifications to the Plan and Options granted thereunder. Unless the Optionee provides written notice to the Company's Stock Option Administrator within thirty (30) days of receipt of the Statement at the principal office of the Company in Calabasas, California, or such other addresses as may be communicated to the Optionee, the Statement (including any revisions incorporated therein) shall be binding on the Optionee, without further notice to or acknowledgment by the Optionee. If no notice is received from the Optionee within the thirty (30) day period, then the Optionee shall be deemed to have acknowledged that the Statement is binding with respect to the information contained therein. IN WITNESS WHEREOF, by clicking the Accept Button below, the Optionee acknowledges acceptance of the terms and conditions of this Agreement. Yes, I do accept (Click here to view grant information. Use your HR Cafe password to log in). No, I do not accept If you do not accept, your grant will be voided. EX-10.85 4 v98358exv10w85.txt EXHIBIT 10.85 EXHIBIT 10.85 AMENDMENT NUMBER FIVE COUNTRYWIDE FINANCIAL CORPORATION 1987 STOCK OPTION PLAN (AMENDED AND RESTATED AS OF JULY 12, 1989) WHEREAS, the Board of Directors of Countrywide Financial Corporation (the "Company") declared a stock dividend effective as of December 17, 2003, which represents a 4-for-3 split of the Company's common stock; WHEREAS, pursuant to Section 17 of the Countrywide Financial Corporation 1987 Stock Option Plan (the "1987 Stock Plan"), the Compensation Committee of the Board of Directors ("the Committee") shall determine the appropriate adjustments, if any, to make; WHEREAS, the Committee wishes to amend Section 17 to enable the Board to make such adjustments by resolution, or, alternatively, for such adjustments to be automatic; NOW THEREFORE, the Plan is amended to read as follows effective December 17, 2003. 1. Section 3, SHARES SUBJECT TO PLAN, of the 1987 Stock Plan is hereby deleted and new Section 3 is inserted in its place as follows: "Subject to Section 17 hereof, the stock to be offered under this Plan shall be authorized but unissued Shares. The aggregate number of Shares issuable under this Plan shall not exceed 2,000,000 Shares, of which no more than 1,278,509 may be issuable to directors, subject to adjustment as set forth in Section 17 of this Plan. If any options granted under the Plan shall terminate, expire or be cancelled without having been exercised in full, the Shares not purchased under such options again shall be available for the purpose of the Plan." 2. The third paragraph of Section 17 is hereby deleted and a new third paragraph of Section 17 is inserted in its place as follows: "Adjustment under this Section 17 shall be made by the Committee or the Board, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. In the event the Committee or Board do not otherwise act pursuant to its prescribed authority, that in the event of a stock split, the number of shares available under the Plan or subject to any individual limits or award type limitations shall be automatically adjusted to reflect the ratio of the stock split." [THE NEXT PAGE IS THE SIGNATURE PAGE] IN WITNESS WHEREOF, The Company has caused this Amendment Number Five to be executed by its duly authorized officer this 14th day of April, 2004. Countrywide Financial Corporation By: /s/ Thomas H. Boone --------------------------------------- Thomas H. Boone Managing Director, Chief Administrative Officer /s/ Gerard A. Healy - -------------------------------- Gerard A. Healy Assistant Secretary EX-10.86 5 v98358exv10w86.txt EXHIBIT 10.86 EXHIBIT 10.86 AMENDMENT NUMBER SIX COUNTRYWIDE FINANCIAL CORPORATION 1987 STOCK OPTION PLAN (AMENDED AND RESTATED AS OF JULY 12, 1989) WHEREAS, the Board of Directors of Countrywide Financial Corporation (the "Company") declared a stock dividend effective as of April 12, 2004, which represents a 3-for-2 split of the Company's common stock; WHEREAS, pursuant to Section 17 of the Countrywide Financial Corporation 1987 Stock Option Plan (the "1987 Stock Plan"), the Compensation Committee of the Board of Directors ("the Committee") or the Board shall determine the appropriate adjustments, if any, to make; NOW THEREFORE, the Plan is amended to read as follows effective December 17, 2003. 1. Section 3, SHARES SUBJECT TO PLAN, of the 1987 Stock Plan is hereby deleted and new Section 3 is inserted in its place as follows: "Subject to Section 17 hereof, the stock to be offered under this Plan shall be authorized but unissued Shares. The aggregate number of Shares issuable under this Plan shall not exceed 3,000,000 Shares, of which no more than 1,917, 763 may be issuable to directors, subject to adjustment as set forth in Section 17 of this Plan. If any options granted under the Plan shall terminate, expire or be cancelled without having been exercised in full, the Shares not purchased under such options again shall be available for the purpose of the Plan." IN WITNESS WHEREOF, The Company has caused this Amendment Number Six to be executed by its duly authorized officer this 14th day of April, 2004. Countrywide Financial Corporation By: /s/ Thomas H. Boone ------------------------------------ Thomas H. Boone Managing Director, Chief Administrative Officer /s/ Gerard A. Healy - ------------------------------ Gerard A. Healy Assistant Secretary EX-10.87 6 v98358exv10w87.txt EXHIBIT 10.87 EXHIBIT 10.87 AMENDMENT NUMBER TEN COUNTRYWIDE FINANCIAL CORPORATION 1991 STOCK OPTION PLAN WHEREAS, the Board of Directors of Countrywide Financial Corporation (the "Company") declared a stock dividend effective as of December 17, 2003, which represents a 4-for-3 split of the Company's common stock; WHEREAS, pursuant to Section 8(a) of the Countrywide Financial Corporation 1991 Stock Option Plan (the "1991 Stock Plan"), the Compensation Committee of the Board of Directors ("the Committee") shall conclusively determine the appropriate adjustments, if any, to the maximum number and class of Shares or other stock or securities with respect to which Options may be granted under the Plan, the number and class of Shares or other stock or securities which are subject to outstanding Options granted under the 1991 Plan and the purchase price therefore, if applicable; WHEREAS, the Committee wishes to amend Section 8(a) to enable the Board to make such adjustments by resolution, or, alternatively, for such adjustments to be automatic; NOW THEREFORE, the Plan is amended to read as follows effective December 17, 2003. 1. Section 4(a) of the Plan is hereby deleted and new Section 4(a) is inserted in its place as follows: "(a) The maximum number of Shares that may be made the subject of options granted under the Plan is 2,200,000 Shares or the number and kind of shares of stock or other securities to which such Shares are adjusted upon a change in Capitalization pursuant to Section 8 and the Company shall reserve for the purposes of the Plan, out of its authorized but unissued Shares or out of Shares held in the Company's treasury, or partly out of each, such number of Shares as shall be determined by the Board." 2. Section 5(b) of the Plan is hereby deleted and new Section 5(b) is inserted in its place as follows: "(b) Number of Shares. Each Director Option granted shall be in respect of a number of Shares equal to the lesser of (i) 6,667 multiplied by a fraction, the numerator of which is the earnings per Share on a fully diluted basis of the Company for the fiscal year of the Company ended immediately before the date of grant of the Director Option (as reported in the audited Financial Statements included in the Company's annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), but in no event less than zero) (the "EPS Numerator Amount) and the denominator of which is $.76 or (ii) 6,667 multiplied by a fraction, the numerator of which is the EPS Numerator Amount and the denominator of which is the earnings per share on a fully diluted basis of the Company for the fiscal year immediately preceding the fiscal year in which the EPS Numerator Amount is determined as reported in the Company's Annual Report on Form 10-K filed with the SEC (in either case adjusted proportionately in the event the Company (a) declares a dividend on the Shares payable in Shares, (b) subdivides the outstanding Shares, (c) combines the outstanding Shares into a smaller number of Shares, or (d) issues any shares of its capital stock in a reclassification of the Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation))." 3. Section 8(a) is hereby deleted and a new Section 8(a) is inserted in its place as follows: "(a) Subject to Section 9, in the event of a Change in Capitalization, the Committee or the Board shall conclusively determine the appropriate adjustments, if any, to the maximum number and class of Shares or other stock or securities with respect to which Options may be granted under the Plan, the number and class of Shares or other stock or securities which are subject to outstanding Options granted under the Plan, and the purchase price therefore, if applicable. In the event the Committee or Board do not otherwise act pursuant to its prescribed authority, that in the event of a stock split, the number of shares available under the Plan or subject to any individual limits or award type limitations shall be automatically adjusted to reflect the ratio of the stock split. Additionally any outstanding Awards shall be adjusted by proportionately increasing the number of shares covered by, and for stock options, proportionately decreasing the exercise price set forth in, the applicable options." [THE NEXT PAGE IS THE SIGNATURE PAGE] IN WITNESS WHEREOF, The Company has caused this Amendment Number Ten to be executed by its duly authorized officer this 14th day of April, 2004. Countrywide Financial Corporation By: /s/ Thomas H. Boone ------------------------------------ Thomas H. Boone Managing Director, Chief Administrative Officer /s/ Gerard A. Healy - ---------------------------------- Gerard A. Healy Assistant Secretary EX-10.88 7 v98358exv10w88.txt EXHIBIT 10.88 EXHIBIT 10.88 AMENDMENT NUMBER ELEVEN COUNTRYWIDE FINANCIAL CORPORATION 1991 STOCK OPTION PLAN WHEREAS, the Board of Directors of Countrywide Financial Corporation (the "Company") declared a stock dividend effective as of April 12, 2004, which represents a 3-for-2 split of the Company's common stock; WHEREAS, pursuant to Section 8(a) of the Countrywide Financial Corporation 1991 Stock Option Plan (the "1991 Stock Plan"), the Compensation Committee of the Board of Directors ("the Committee") or the Board shall conclusively determine the appropriate adjustments, if any, to the maximum number and class of Shares or other stock or securities with respect to which Options may be granted under the Plan, the number and class of Shares or other stock or securities which are subject to outstanding Options granted under the 1991 Plan and the purchase price therefore, if applicable; NOW THEREFORE, the Plan is amended to read as follows effective December 17, 2003. 1. Section 4(a) of the Plan is hereby deleted and new Section 4(a) is inserted in its place as follows: "(a) The maximum number of Shares that may be made the subject of options granted under the Plan is 3,300,000 Shares or the number and kind of shares of stock or other securities to which such Shares are adjusted upon a change in Capitalization pursuant to Section 8 and the Company shall reserve for the purposes of the Plan, out of its authorized but unissued Shares or out of Shares held in the Company's treasury, or partly out of each, such number of Shares as shall be determined by the Board." 2. Section 5(b) of the Plan is hereby deleted and new Section 5(b) is inserted in its place as follows: "(b) Number of Shares. Each Director Option granted shall be in respect of a number of Shares equal to the lesser of (i) 10,000 multiplied by a fraction, the numerator of which is the earnings per Share on a fully diluted basis of the Company for the fiscal year of the Company ended immediately before the date of grant of the Director Option (as reported in the audited Financial Statements included in the Company's annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), but in no event less than zero) (the "EPS Numerator Amount) and the denominator of which is $.51 or (ii) 10,000 multiplied by a fraction, the numerator of which is the EPS Numerator Amount and the denominator of which is the earnings per share on a fully diluted basis of the Company for the fiscal year immediately preceding the fiscal year in which the EPS Numerator Amount is determined as reported in the Company's Annual Report on Form 10-K filed with the SEC (in either case adjusted proportionately in the event the Company (a) declares a dividend on the Shares payable in Shares, (b) subdivides the outstanding Shares, (c) combines the outstanding Shares into a smaller number of Shares, or (d) issues any shares of its capital stock in a reclassification of the Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation))." 3. Section 8(a) is hereby deleted and a new Section 8(a) is inserted in its place as follows: "(a) Subject to Section 9, in the event of a Change in Capitalization, the Committee or the Board shall conclusively determine the appropriate adjustments, if any, to the maximum number and class of Shares or other stock or securities with respect to which Options may be granted under the Plan, the number and class of Shares or other stock or securities which are subject to outstanding Options granted under the Plan, and the purchase price therefore, if applicable. In the event the Committee or Board do not otherwise act pursuant to its prescribed authority, that in the event of a stock split, the number of shares available under the Plan or subject to any individual limits or award type limitations shall be automatically adjusted to reflect the ratio of the stock split. Additionally any outstanding Awards shall be adjusted by proportionately increasing the number of shares covered by, and for stock options, proportionately decreasing the exercise price set forth in, the applicable options." IN WITNESS WHEREOF, The Company has caused this Amendment Number Eleven to be executed by its duly authorized officer this 14th day of April, 2004. Countrywide Financial Corporation By: /s/ Thomas H. Boone -------------------------------- Thomas H. Boone Managing Director, Chief Administrative Officer /s/ Gerard A. Healy - ----------------------------- Gerard A. Healy Assistant Secretary EX-10.89 8 v98358exv10w89.txt EXHIBIT 10.89 EXHIBIT 10.89 AMENDMENT NUMBER FOUR COUNTRYWIDE FINANCIAL CORPORATION 1992 STOCK OPTION PLAN WHEREAS, the Board of Directors of Countrywide Financial Corporation (the "Company") declared a stock dividend effective as of December 17, 2003, which represents a 4-for-3 split of the Company's common stock; WHEREAS, pursuant to Section 6(a) of the Countrywide Financial Corporation 1992 Stock Option Plan (the "Plan"), the Compensation Committee of the Board of Directors ("the Committee") shall conclusively determine the appropriate adjustments, if any, to the maximum number and class of shares or other stock or securities with respect to which Options may be granted under the Plan, the number and class of Shares or other stock or securities which are subject to outstanding Options granted under the Plan, and the purchase price therefore, if applicable; WHEREAS, the Committee wishes to amend Section 6(a) to enable the Board to make such adjustments by resolution or alternatively, for such adjustments to be automatic. NOW THEREFORE, the Plan is amended to read as follows effective December 17, 2003. 1. Section 4(a) is hereby deleted and new Section 4(a) is inserted in its place as follows: "(a) The maximum number of Shares that may be made the subject of Options granted under the Plan is 800,000 Shares (or the number and kind of shares of stock or other securities to which such Shares are adjusted upon a Change in Capitalization pursuant to Section 6) and the Company shall reserve for the purposes of the Plan, out of its authorized but unissued Shares or out of Shares held in the Company's treasury, or partly out of each, such number of Shares as shall be determined by the Board." 2. Section 6(a) is hereby deleted and new Section 6(a) is inserted in its place as follows: "(a) Subject to Section 7, in the event of a Change in Capitalization, the Committee or the Board shall conclusively determine the appropriate adjustments, if any, to the maximum number and class of Shares or other stock or securities with respect to which Options may be granted under the Plan, the number and class of Shares or other stock or securities which are subject to outstanding Options granted under the Plan, and the purchase price therefore, if applicable. In the event the Committee or Board do not otherwise act pursuant to its prescribed authority, that in the event of a stock split, the number of shares available under the Plan or subject to any individual limits or award type limitations shall be automatically adjusted to reflect the ratio of the stock split. Additionally any outstanding Awards shall be adjusted by proportionately increasing the number of shares covered by, and for stock options, proportionately decreasing the exercise price set forth in, the applicable options." IN WITNESS WHEREOF, The Company has caused this Amendment Number Four to be executed by its duly authorized officer this 14th day of April, 2004. Countrywide Financial Corporation By: /s/ Thomas H. Boone ------------------------------------ Thomas H. Boone Senior Managing Director, Chief Administrative Officer /s/ Gerard A. Healy - ----------------------------------- Gerard A. Healy Assistant Secretary EX-10.90 9 v98358exv10w90.txt EXHIBIT 10.90 EXHIBIT 10.90 AMENDMENT NUMBER FIVE COUNTRYWIDE FINANCIAL CORPORATION 1992 STOCK OPTION PLAN WHEREAS, the Board of Directors of Countrywide Financial Corporation (the "Company") declared a stock dividend effective as of April 12, 2004, which represents a 3-for-2 split of the Company's common stock; WHEREAS, pursuant to Section 6(a) of the Countrywide Financial Corporation 1992 Stock Option Plan (the "Plan"), the Compensation Committee of the Board of Directors ("the Committee") or the Board shall conclusively determine the appropriate adjustments, if any, to the maximum number and class of shares or other stock or securities with respect to which Options may be granted under the Plan, the number and class of Shares or other stock or securities which are subject to outstanding Options granted under the Plan, and the purchase price therefore, if applicable; NOW THEREFORE, the Plan is amended to read as follows effective April 12, 2004. 1. Section 4(a) is hereby deleted and new Section 4(a) is inserted in its place as follows: "(a) The maximum number of Shares that may be made the subject of Options granted under the Plan is 1,200,000 Shares (or the number and kind of shares of stock or other securities to which such Shares are adjusted upon a Change in Capitalization pursuant to Section 6) and the Company shall reserve for the purposes of the Plan, out of its authorized but unissued Shares or out of Shares held in the Company's treasury, or partly out of each, such number of Shares as shall be determined by the Board." 2. Section 6(a) is hereby deleted and new Section 6(a) is inserted in its place as follows: "(a) Subject to Section 7, in the event of a Change in Capitalization, the Committee or the Board shall conclusively determine the appropriate adjustments, if any, to the maximum number and class of Shares or other stock or securities with respect to which Options may be granted under the Plan, the number and class of Shares or other stock or securities which are subject to outstanding Options granted under the Plan, and the purchase price therefore, if applicable. In the event the Committee or Board do not otherwise act pursuant to its prescribed authority, that in the event of a stock split, the number of shares available under the Plan or subject to any individual limits or award type limitations shall be automatically adjusted to reflect the ratio of the stock split. Additionally any outstanding Awards shall be adjusted by proportionately increasing the number of shares covered by, and for stock options, proportionately decreasing the exercise price set forth in, the applicable options." IN WITNESS WHEREOF, The Company has caused this Amendment Number Five to be executed by its duly authorized officer this 14th day of April, 2004. Countrywide Financial Corporation By: /s/ Thomas H. Boone ----------------------------------- Thomas H. Boone Senior Managing Director, Chief Administrative Officer /s/ Gerard A. Healy - -------------------------------- Gerard A. Healy Assistant Secretary EX-10.91 10 v98358exv10w91.txt EXHIBIT 10.91 EXHIBIT 10.91 AMENDMENT NUMBER EIGHT TO THE COUNTRYWIDE FINANCIAL CORPORATION 1993 STOCK OPTION PLAN (AS AMENDED AND RESTATED AS OF MARCH 27, 1996) WHEREAS, the Board of Directors of Countrywide Financial Corporation (the "Company") declared a stock dividend effective as of December 17, 2003 which represents a 4-for-3 split of the Company's common stock; and WHEREAS, pursuant to Section 8(a) of the Countrywide Financial Corporation 1993 Stock Option Plan (as Amended and Restated March 27, 1996) (the "1993 Plan"), the Compensation Committee of the Board of Directors ("the Committee") shall appropriately and equitably adjust the number of shares of common stock or other securities which are subject to the 1993 Plan or subject to any Option theretofore granted; WHEREAS, The Committee wishes to amend Section 8(a) to enable the Board to make such adjustments by resolution or, alternatively, for such adjustments to be automatic; NOW THEREFORE, the Plan is amended to read as follows effective December 17, 2003: 1. Section 4 (a) is hereby deleted in its entirety and new Section 4 (a) is hereby inserted in its place as follows: "(a) The maximum number of Shares that may be made the subject of Options granted under the Plan is 21,333,333; provided, however, that the maximum number of Shares that may be the subject of Options granted to any Eligible Employee from and after March 27, 1996 and during the term of the Plan may not exceed four million (4,000,000). Upon a Change in Capitalization the maximum number of Shares shall be adjusted in number and kind pursuant to Section 8. The Company shall reserve for the purposes of the Plan, out of its authorized but unissued Shares or out of Shares held in the Company's treasury, or partly out of each, such number of Shares as shall be determined by the Board." 2. Section 5 (b) is hereby deleted and new Section 5 (b) is inserted in its place as follows: (b) "Number of Shares. Each Director Option granted shall be in respect of a number of Shares equal to the lesser of (1) 10,000 multiplied by a fraction, the numerator of which is the earnings per Share on a fully diluted basis of the Company for the fiscal year of the Company ended immediately before the date of grant of the Director Option (as reported in the audited Financial Statements included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), but in no event less than zero) (the "EPS Numerator Amount") and the denominator of which is $.51 or (2) 10,000 multiplied by a fraction, the numerator of which is the EPS Numerator Amount and the denominator of which is the earnings per share on a fully diluted basis of the Company for the fiscal year immediately preceding the fiscal year in respect of which the EPS Numerator Amount is determined as reported in the Company's Annual Report on Form 10-K filed with the SEC. The number 10,000 and the $.51 amount referred to in the previous sentence shall be equitably adjusted in the event of a Change in Capitalization." 3. Section 8 (a) is hereby deleted and new Section 8 (a) is inserted in its place as follows: (a) Subject to Section 9, in the event of a Change in Capitalization, the maximum number and class of Shares or other stock or securities with respect to which Options may be granted under the Plan in the aggregate and to any Optionee, the number and class of Shares or other stock or securities which are subject to outstanding Options granted under the Plan, and the purchase price therefore, if applicable, shall be appropriately and equitably adjusted by the Committee or the Board. In the event the Committee or Board do not otherwise act pursuant to its prescribed authority, that in the event of a stock split, the number of shares available under the Plan or subject to any individual limits or award type limitations shall be automatically adjusted to reflect the ratio of the stock split. Additionally any outstanding Awards shall be adjusted by proportionately increasing the number of shares covered by, and for stock options, proportionately decreasing the exercise price set forth in, the applicable options. [THE NEXT PAGE IS THE SIGNATURE PAGE] IN WITNESS WHEREOF, the Company has caused this Amendment Number Eight to be executed by its duly authorized officer this 14th day of April, 2004. Countrywide Financial Corporation By: /s/ Thomas Boone -------------------------------------- Thomas Boone Senior Managing Director, Chief Administrative Officer Attest: /s/ Gerard A. Healy - ------------------------------ Gerard A. Healy Assistant Secretary EX-10.92 11 v98358exv10w92.txt EXHIBIT 10.92 EXHIBIT 10.92 AMENDMENT NUMBER NINE TO THE COUNTRYWIDE FINANCIAL CORPORATION 1993 STOCK OPTION PLAN (AS AMENDED AND RESTATED AS OF MARCH 27, 1996) WHEREAS, the Board of Directors of Countrywide Financial Corporation (the "Company") declared a stock dividend effective as of April 12, 2004 which represents a 3-for-2 split of the Company's common stock; and WHEREAS, pursuant to Section 8(a) of the Countrywide Financial Corporation 1993 Stock Option Plan (as Amended and Restated March 27, 1996) (the "1993 Plan"), the Compensation Committee of the Board of Directors ("the Committee") or the Board of Directors shall appropriately and equitably adjust the number of shares of common stock or other securities which are subject to the 1993 Plan or subject to any Option theretofore granted. NOW THEREFORE, the Plan is amended to read as follows effective December 17, 2003. 1. Section 4 (a) is hereby deleted in its entirety and new Section 4 (a) is hereby inserted in its place as follows: "(a) The maximum number of Shares that may be made the subject of Options granted under the Plan is 32,000,000; provided, however, that the maximum number of Shares that may be the subject of Options granted to any Eligible Employee from and after March 27, 1996 and during the term of the Plan may not exceed six million (6,000,000). Upon a Change in Capitalization the maximum number of Shares shall be adjusted in number and kind pursuant to Section 8. The Company shall reserve for the purposes of the Plan, out of its authorized but unissued Shares or out of Shares held in the Company's treasury, or partly out of each, such number of Shares as shall be determined by the Board." 2. Section 5 (b) is hereby deleted and new Section 5 (b) is inserted in its place as follows: (b) "Number of Shares. Each Director Option granted shall be in respect of a number of Shares equal to the lesser of (1) 15,000 multiplied by a fraction, the numerator of which is the earnings per Share on a fully diluted basis of the Company for the fiscal year of the Company ended immediately before the date of grant of the Director Option (as reported in the audited Financial Statements included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), but in no event less than zero) (the "EPS Numerator Amount") and the denominator of which is $.34 or (2) 15,000 multiplied by a fraction, the numerator of which is the EPS Numerator Amount and the denominator of which is the earnings per share on a fully diluted basis of the Company for the fiscal year immediately preceding the fiscal year in respect of which the EPS Numerator Amount is determined as reported in the Company's Annual Report on Form 10-K filed with the SEC. The number 15,000 and the $.34 amount referred to in the previous sentence shall be equitably adjusted in the event of a Change in Capitalization." IN WITNESS WHEREOF, the Company has caused this Amendment Number Nine to be executed by its duly authorized officer this 14th day of April, 2004. Countrywide Financial Corporation By: /s/ Thomas Boone --------------------------------------- Thomas Boone Senior Managing Director, Chief Administrative Officer Attest: /s/ Gerard A. Healy - --------------------------------- Gerard A. Healy Senior Vice President and Assistant Legal Counsel EX-10.93 12 v98358exv10w93.txt EXHIBIT 10.93 EXHIBIT 10.93 FIRST AMENDMENT TO 2000 EQUITY INCENTIVE PLAN OF COUNTRYWIDE FINANCIAL CORPORATION (AMENDED AND RESTATED NOVEMBER 12, 2003) WHEREAS, the Board of Directors of Countrywide Financial Corporation (the "Company") declared a stock dividend effective as of December 17, 2003 which represents a 4-for-3 split of the Company's common stock; WHEREAS, pursuant to Section 8.2 of the 2000 Equity Incentive Plan of Countrywide Financial Corporation (as Amended and Restated November 12, 2003) (the "2000 Stock Plan"), the Compensation Committee of the Board of Directors ("the Committee") shall appropriately and equitably adjust the number of shares of common stock or other securities which are subject to the 2000 Stock Plan or subject to any Awards theretofore granted, including the exercise or settlement price of Options, so as to maintain the proportionate number of shares or other securities which are subject to the 2000 Stock Plan without changing the aggregate exercise or settlement price; and WHEREAS, The Committee wishes to amend Section 8.2 to enable the Board to make such adjustments by resolution or, alternatively, for such adjustments to be automatic. NOW THEREFORE, the 2000 Stock Plan is amended to read as follows effective December 17, 2003. 1. Section 3.1, Aggregate Limits, is hereby deleted and new Section 3.1, is inserted in its place as follows: "AGGREGATE LIMITS. The aggregate number of shares of the Company's common stock, par value $.05 per share ("Shares"), that may be made the subject of Awards granted under this Plan is 22,333,333, of which a maximum of 1,333,333 Shares may be issued in the form of Restricted Stock (as defined below). The maximum number of shares subject to the Plan shall be adjusted as provided in Section 8 of the Plan upon a change in the capital structure of the Company. The maximum number of Shares that may be made the subject of Awards to Nonemployee Directors under this Plan in any one calendar year is 83,333 with respect to Options and 40,000 shares with respect to Restricted Stock. The Company shall reserve for the purpose of this Plan, out of its authorized but unissued Shares or out of Shares held in the Company's treasury, or partly out of each, such number of Shares as shall be determined by the Board." 2. Section 3.2, Tax Code Limits, is hereby deleted and new Section 3.2 is inserted in its place as follows: "TAX-CODE LIMITS. The aggregate number of Shares subject to Options granted under this Plan during any calendar year to any one Eligible Person, shall not exceed 4,000,000. Notwithstanding anything to the contrary in this Plan, the foregoing limitations shall be subject to adjustment under Section 8 only to the extent that such adjustment will not affect the status of any Option intended to qualify as "performance based compensation" under Code Section 162(m). The foregoing limitations shall not apply to the extent that they are no longer required in order for compensation in connection with grants under this Plan to be treated as "performance-based compensation" under Code Section 162(m)." 3. Section 8.2, Adjustments Upon Certain Events, is hereby deleted, and new Section 8.2 is inserted in its place as follows: "ADJUSTMENTS UPON CERTAIN EVENTS. If the outstanding shares of common stock or other securities of the Company, or both, for which the restrictions upon Restricted Stock have lapsed or for which an Option is then exercisable or as to which an Option is to be settled shall at any time be changed or exchanged by declaration of a stock dividend, stock split or reverse stock split, combination of shares, recapitalization, or reorganization, the Committee or the Board shall appropriately and equitably adjust the number and kind of shares of common stock or other securities which are subject to the Plan or subject to any Awards theretofore granted, including the exercise or settlement prices of Options, so as to maintain the proportionate number of shares or other securities without changing the aggregate exercise or settlement price; provided, however, that such adjustment shall be made only to the extent that such adjustment will not affect the status of an Option intended to qualify as an ISO or as "performance based compensation" under Code Section 162(m). In the event the Committee or Board do not otherwise act pursuant to its prescribed authority, that in the event of a stock split, the number of shares available under the Plan or subject to any individual limits or award type limitations shall be automatically adjusted to reflect the ratio of the stock split. Additionally any outstanding Awards shall be adjusted by proportionately increasing the number of shares covered by, and for stock options, proportionately decreasing the exercise price set forth in, the applicable options. If the Company recapitalizes or otherwise changes its capital structure, or merges, consolidates, sells all of its assets or dissolves (each of the foregoing a "Fundamental Change"), then thereafter upon the lapse of any restrictions upon Restricted Stock or any exercise of Options theretofore granted, the Participant shall be entitled, in the case of Restricted Stock, to the number of shares or, in the case of Options, to purchase under such Options, in lieu of the number of shares of common stock as to which such Options shall then be exercisable, the number and class of shares of stock, securities, cash, property or other consideration to which the Participant would have been entitled pursuant to the terms of the Fundamental Change if, immediately prior to such Fundamental Change, the Participant had been the holder of record of the number of shares of Restricted Stock or, as applicable, common stock as to which Options is then exercisable." IN WITNESS WHEREOF, the Company has caused this First Amendment to be executed by its duly authorized officer this 14th day of April, 2004. Countrywide Financial Corporation By: /s/ Thomas H. Boone -------------------------------------- Thomas H. Boone Senior Managing Director, Chief Administrative Officer /s/ Gerard A. Healy - --------------------------- Gerard A. Healy Assistant Secretary EX-10.94 13 v98358exv10w94.txt EXHIBIT 10.94 EXHIBIT 10.94 SECOND AMENDMENT TO 2000 EQUITY INCENTIVE PLAN OF COUNTRYWIDE FINANCIAL CORPORATION (AMENDED AND RESTATED NOVEMBER 12, 2003) WHEREAS, the Board of Directors of Countrywide Financial Corporation (the "Company") declared a stock dividend effective as of April 12, 2004 which represents a 3-for-2 split of the Company's common stock; and WHEREAS, pursuant to Section 8.2 of the 2000 Equity Incentive Plan of Countrywide Financial Corporation (as Amended and Restated November 12, 2003) (the "2000 Stock Plan"), the Compensation Committee of the Board of Directors ("the Committee") or the Board of Directors shall appropriately and equitably adjust the number of shares of common stock or other securities which are subject to the 2000 Stock Plan or subject to any Awards theretofore granted, including the exercise or settlement price of Options, so as to maintain the proportionate number of shares or other securities which are subject to the 2000 Stock Plan without changing the aggregate exercise or settlement price; NOW THEREFORE, the 2000 Stock Plan is amended to read as follows effective April 12, 2004. 1. Section 3.1, Aggregate Limits, is hereby deleted and new Section 3.1, is inserted in its place as follows: "AGGREGATE LIMITS. The aggregate number of shares of the Company's common stock, par value $.05 per share ("Shares"), that may be made the subject of Awards granted under this Plan is 33,500,000, of which a maximum of 2,000,000 Shares may be issued in the form of Restricted Stock (as defined below). The maximum number of shares subject to the Plan shall be adjusted as provided in Section 8 of the Plan upon a change in the capital structure of the Company. The maximum number of Shares that may be made the subject of Awards to Nonemployee Directors under this Plan in any one calendar year is 125,000 with respect to Options and 60,000 shares with respect to Restricted Stock. The Company shall reserve for the purpose of this Plan, out of its authorized but unissued Shares or out of Shares held in the Company's treasury, or partly out of each, such number of Shares as shall be determined by the Board." 2. Section 3.2, Tax Code Limits, is hereby deleted and new Section 3.2 is inserted in its place as follows: "TAX-CODE LIMITS. The aggregate number of Shares subject to Options granted under this Plan during any calendar year to any one Eligible Person, shall not exceed 6,000,000. Notwithstanding anything to the contrary in this Plan, the foregoing limitations shall be subject to adjustment under Section 8 only to the extent that such adjustment will not affect the status of any Option intended to qualify as "performance based compensation" under Code Section 162(m). The foregoing limitations shall not apply to the extent that they are no longer required in order for compensation in connection with grants under this Plan to be treated as "performance-based compensation" under Code Section 162(m)." IN WITNESS WHEREOF, the Company has caused this Second Amendment to be executed by its duly authorized officer this 14th day of April, 2004. Countrywide Financial Corporation By: /s/ Thomas H. Boone ---------------------------------- Thomas H. Boone Senior Managing Director, Chief Administrative Officer /s/ Gerard A. Healy - ------------------------------- Gerard A. Healy Assistant Secretary EX-10.95 14 v98358exv10w95.txt EXHIBIT 10.95 EXHIBIT 10.95 AMENDMENT NUMBER THREE TO COUNTRYWIDE FINANCIAL CORPORATION GLOBAL STOCK PLAN WHEREAS, Countrywide Financial Corporation (the "Company") desires to amend its Global Stock Plan (the "Plan") to reflect the stock dividend of 17 December 2003; NOW, THEREFORE, the Plan is amended to read as follows effective December 17, 2003: 1. Section 4.01 of the Plan, Stock Subject to Plan, is hereby amended by deleting this section in its entirety and replacing it with a new Section 4.01 as follows: "4.01 Stock Subject to the Plan. Subject to the provisions of Sections 12.03 and 12.04 hereof, the Board shall reserve for issuance under the Plan an aggregate of one million five hundred thousand (2,000,000) shares of Common Stock, which shares shall be authorized but unissued." 2. Section 4.1 of Appendix I of the Plan ("UK Sharesave Scheme") is hereby amended by deleting this Section in its entirety and replacing it with a new Section 4.1 as follows: "4.1 No options shall be granted in any year which would, at the time they are granted, cause the number of shares in the Company allocated under this Plan to exceed 2,000,000." 3. Section 11(1) of the UK Sharesave Scheme is hereby amended by deleting this Section in its entirety and replacing it with a new Section 4.1 as follows: "(1) In the event of any Issue or Reorganisation: (a) the number of Shares comprised in an Option; and/or (b) the Acquisition Price under an Option may be adjusted in such manner as the Committee or Board decides, with the prior approval of Inland Revenue." [THE NEXT PAGE IS THE SIGNATURE PAGE] IN WITNESS WHEREOF, the Company has caused this Amendment Number Three to be executed by its duly authorized officer this 14th day of April, 2004. Countrywide Financial Corporation By: /s/ Thomas H. Boone ------------------- Thomas H. Boone Senior Managing Director, Chief Administrative Officer Attest: /s/ Gerard A. Healy - ------------------- Gerard A. Healy Assistant Secretary EX-10.96 15 v98358exv10w96.txt EXHIBIT 10.96 EXHIBIT 10.96 AMENDMENT NUMBER FOUR TO COUNTRYWIDE FINANCIAL CORPORATION GLOBAL STOCK PLAN WHEREAS, Countrywide Financial Corporation (the "Company") desires to amend its Global Stock Plan (the "Plan") to reflect the stock dividend of 12 April 2004; NOW, THEREFORE, the Plan is amended to read as follows effective December 17, 2003: 1. Section 4.01 of the Plan, Stock Subject to Plan, is hereby amended by deleting this section in its entirety and replacing it with a new Section 4.01 as follows: "4.01 Stock Subject to the Plan. Subject to the provisions of Sections 12.03 and 12.04 hereof, the Board shall reserve for issuance under the Plan an aggregate of two million (3,000,000) shares of Common Stock, which shares shall be authorized but unissued." 2. Section 4.1 of Appendix I of the Plan ("UK Sharesave Scheme") is hereby amended by deleting this Section in its entirety and replacing it with a new Section 4.1 as follows: "4.1 No options shall be granted in any year which would, at the time they are granted, cause the number of shares in the Company allocated under this Plan to exceed 3,000,000." 3. Section 11(1) of the UK Sharesave Scheme is hereby amended by deleting this Section in its entirety and replacing it with a new Section 4.1 as follows: "(1) In the event of any Issue or Reorganisation: (a) the number of Shares comprised in an Option; and/or (b) the Acquisition Price under an Option may be adjusted in such manner as the Committee or Board decides, with the prior approval of Inland Revenue." [THE NEXT PAGE IS THE SIGNATURE PAGE] IN WITNESS WHEREOF, the Company has caused this Amendment Number Four to be executed by its duly authorized officer this 14th day of April, 2004. Countrywide Financial Corporation By: /s/ Thomas H. Boone ------------------- Thomas H. Boone Senior Managing Director, Chief Administrative Officer Attest: /s/ Gerard A. Healy - ------------------- Gerard A. Healy Assistant Secretary EX-12.1 16 v98358exv12w1.txt EXHIBIT 12.1 COUNTRYWIDE FINANCIAL CORPORATION AND SUBSIDIARIES EXHIBIT 12.1 - COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES (DOLLAR AMOUNTS IN THOUSANDS) The following table sets forth the ratio of earnings to fixed charges of the Company for the three months ended March 31, 2004 and 2003, the year ended December 31, 2003 and 2002, ten-month period ended December 31, 2001, and the previous two fiscal years ended February 28(29) computed by dividing net fixed charges (interest expense on all debt plus the interest element (one-third) of operating leases) into earnings (earnings before income taxes and fixed charges).

EX-31.1 17 v98358exv31w1.txt EXHIBIT 31.1 EXHIBIT 31.1 CERTIFICATION I, Angelo R. Mozilo, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Countrywide Financial Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 7, 2004 /s/ Angelo R. Mozilo - ----------------------- Angelo R. Mozilo Chief Executive Officer EX-31.2 18 v98358exv31w2.txt EXHIBIT 31.2 EXHIBIT 31.2 CERTIFICATION I, Thomas K. McLaughlin, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Countrywide Financial Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 7, 2004 /s/ Thomas K. McLaughlin - ------------------------ Thomas K. McLaughlin Chief Financial Officer EX-32.1 19 v98358exv32w1.txt EXHIBIT 32.1 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Countrywide Financial Corporation (the "Company") for the period ended March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Angelo R. Mozilo, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Angelo R. Mozilo - ----------------------- Angelo R. Mozilo Chief Executive Officer May 7, 2004 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Countrywide Financial Corporation and will be retained by Countrywide Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request. EX-32.2 20 v98358exv32w2.txt EXHIBIT 32.2 EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Countrywide Financial Corporation (the "Company") for the period ended March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas K. McLaughlin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Thomas K. McLaughlin - ------------------------ Thomas K. McLaughlin Chief Financial Officer May 7, 2004 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Countrywide Financial Corporation and will be retained by Countrywide Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----


(Mark One)
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended March 31, 2004

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to


Delaware		13-2641992
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

4500 Park Granada, Calabasas, California (Address of principal executive offices)		91302 (Zip Code)


Class		Outstanding at May 3, 2004

Common Stock $.05 par value		279,383,032


PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosure About Market Risk
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 6. Exhibits
Exhibit 3.11
Exhibit 10.84
Exhibit 10.85
Exhibit 10.86
Exhibit 10.87
Exhibit 10.88
Exhibit 10.89
Exhibit 10.90
Exhibit 10.91
Exhibit 10.92
Exhibit 10.93
Exhibit 10.94
Exhibit 10.95
Exhibit 10.96
Exhibit 12.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2


		March 31,		December 31,
		2004		2003

		(Unaudited)

		(Dollar amounts in thousands,
		except share data)
A S S E T S
Cash		$	1,202,391	$	633,467
Mortgage loans and mortgage-backed securities held for sale			19,352,092		24,103,625
Trading securities owned, at market value			11,491,721		6,806,368
Trading securities pledged as collateral, at market value			1,301,510		4,118,012
Securities purchased under agreements to resell			12,756,767		10,348,102
Loans held for investment, net			29,940,700		26,368,055
Investments in other financial instruments			11,267,090		12,952,095
Mortgage servicing rights, net			6,406,491		6,863,625
Property, equipment and leasehold improvements, net			849,877		755,276
Other assets			5,708,145		5,029,048

	Total assets	$	100,276,784	$	97,977,673

Borrower and investor custodial accounts		$	19,422,075	$	14,426,868


LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes payable		$	40,695,571	$	39,948,461
Securities sold under agreements to repurchase			28,158,527		32,013,412
Deposit liabilities			12,225,440		9,327,671
Accounts payable and accrued liabilities			7,820,032		6,248,624
Income taxes payable			2,591,208		2,354,789

	Total liabilities		91,490,778		89,892,957
Commitments and contingencies			—		—
Shareholders’ equity
Preferred stock — authorized, 1,500,000 shares of $0.05 par value; none issued and outstanding			—		—
Common stock — authorized, 500,000,000 shares of $0.05 par value; issued and outstanding, 278,833,972 shares and 276,735,890 shares at March 31, 2004 and December 31, 2003, respectively			13,942		13,837
Additional paid-in capital			2,369,013		2,302,919
Accumulated other comprehensive income			149,439		164,526
Retained earnings			6,253,612		5,603,434

	Total shareholders’ equity		8,786,006		8,084,716

	Total liabilities and shareholders’ equity	$	100,276,784	$	97,977,673

Borrower and investor custodial accounts		$	19,422,075	$	14,426,868



			Quarter Ended March 31,

			2004			2003


			(Dollar amounts in thousands,
			except per share data)
Revenues
	Gain on sale of loans and securities		$	1,358,667		$	1,352,570
	Interest income			1,049,750			642,122
	Interest expense			(529,928	)		(414,129	)

		Net interest income		519,822			227,993
	Loan servicing fees and other income from retained interests			756,781			603,259
	Amortization of mortgage servicing rights			(413,682	)		(362,500	)
	Impairment of retained interests			(995,645	)		(662,413	)
	Servicing hedge gains			672,796			6,361

		Net loan servicing fees and other income from retained interests		20,250			(415,293	)
	Net insurance premiums earned			195,383			171,136
	Commissions and other income			120,781			114,218

		Total revenues		2,214,903			1,450,624
Expenses
	Compensation expenses			678,943			578,367
	Occupancy and other office expenses			167,871			127,542
	Insurance claim expenses			84,675			88,098
	Other operating expenses			159,454			132,049

		Total expenses		1,090,943			926,056

Earnings before income taxes				1,123,960			524,568
	Provision for income taxes			432,988			198,277

NET EARNINGS			$	690,972		$	326,291

Earnings per share
	Basic		$	2.49		$	1.28
	Diluted		$	2.22		$	1.22


								Accumulated
					Additional			Other
	Number		Common		Paid-in-			Comprehensive			Retained
	of Shares		Stock		Capital			Income			Earnings			Total


	(Dollar amounts in thousands, except share data)
Balance at December 31, 2003		184,490,593	$	9,225	$	2,307,531		$	164,526		$	5,603,434		$	8,084,716
Cash dividends paid — $0.22 per common share		—		—		—			—			(40,794	)		(40,794	)
Stock options exercised		1,093,103		54		28,533			—			—			28,587
Tax benefit of stock options exercised		—		—		22,050			—			—			22,050
Contribution of common stock to 401(k) Plan		81,258		4		6,161			—			—			6,165
Issuance of common stock		234,336		12		9,385			—			—			9,397
3-for-2 stock split		92,934,682		4,647		(4,647	)		—			—			—
Other comprehensive income, net of tax		—		—		—			(15,087	)		—			(15,087	)
Net earnings for the period		—		—		—			—			690,972			690,972

Balance at March 31, 2004		278,833,972	$	13,942	$	2,369,013		$	149,439		$	6,253,612		$	8,786,006



		Quarter Ended
		March 31,

		2004			2003

Weighted Average Assumptions:
	Dividend yield		0.8	%		0.9	%
	Expected volatility		33	%		27	%
	Risk-free interest rate		3.3	%		2.3	%
	Annual expected life (in years)		4.9			4.2
Weighted Average Exercise price		$	51.24		$	26.67
Per-share fair value of options		$	16.29		$	6.14


	Estimated MSR
Year Ended March 31,	Amortization

	(Dollar amounts
	in thousands)
2005	$	1,798,203
2006		1,415,666
2007		1,098,916
2008		856,426
2009		659,743

Five year total	$	5,828,954


		March 31, 2004		December 31, 2003


		(Dollar amounts in thousands)
Mortgage pass-through securities:
	Fixed-rate	$	8,952,610	$	8,523,439
	Adjustable-rate		527,597		476,514

			9,480,207		8,999,953
Collateralized mortgage obligations			1,612,557		1,362,446
U.S. Treasury securities			1,087,229		192,174
Agency debt securities			395,474		243,790
Asset-backed securities			177,994		99,774
Negotiable certificates of deposits			39,770		26,243

		$	12,793,231	$	10,924,380


Note 7 –	Investments in Other Financial Instruments



	March 31, 2004

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value


	(Dollar amounts in thousands)
Home equity AAA asset-backed senior securities	$	3,700,325	$	113,731	$	—		$	3,814,056
Other interests retained in securitization		1,802,920		80,935		(720	)		1,883,135
Mortgage-backed securities		3,730,851		32,552		(9,502	)		3,753,901
U.S. Treasury securities and obligations of U.S. Government-sponsored enterprises		298,668		22,031		(15,355	)		305,344
Other		65		1		—			66

	$	9,532,829	$	249,250	$	(25,577	)	$	9,756,502



	Outstanding Balance						Interest Rate				Maturity Date

	Floating
	Rate		Fixed Rate		Total		From		To		From		To


	(Dollar amounts in thousands)
Series L	$	3,130,000	$	1,850,000	$	4,980,000		1.2%		4.0%		January 18, 2005		March 22, 2011
Euro Notes		274,103		—		274,103		1.2%		1.3%		March 1, 2005		March 8, 2005

	$	3,404,103	$	1,850,000	$	5,254,103


Year ended March 31,	Amount		Rate

	(Dollar amounts
	in thousands)
2005	$	150,000		1.33%
2006		500,000		1.92%
2007		550,000		2.51%
2008		400,000		3.07%
2009		200,000		3.40%

	$	1,800,000		2.47%



		March 31, 2004

		Countrywide		Countrywide
		Capital I		Capital III


		(Dollar amounts
		in thousands)
Balance Sheets:
Junior subordinated debentures receivable		$	307,256	$	205,193
Other assets			7,217		4,842

	Total assets	$	314,473	$	210,035

Notes payable		$	9,279	$	6,200
Other liabilities			7,217		4,842
Company-obligated mandatorily redeemable capital trust pass-through securities			297,977		198,993
Equity			—		—

	Total liabilities and equity	$	314,473	$	210,035


Item 1.	*Financial Statements*


Note 2 —	Earnings Per Share


	*Stock-Based Compensation*


Note 3 —	Mortgage Servicing Rights



		Three Months Ended
		March 31, 2004

		Countrywide			Countrywide
		Capital I			Capital III


		(Dollar amounts in
		thousands)
Statements of Earnings:
Revenues		$	6,208		$	4,161
Expenses			(6,208	)		(4,161	)
Provision for income taxes			—			—

	Net earnings	$	—		$	—



		Three Months Ended
		March 31, 2003

		Countrywide			Countrywide
		Capital I			Capital III


		(Dollar amounts in
		thousands)
Statements of Earnings:
Revenues		$	6,208		$	4,161
Expenses			(6,208	)		(4,161	)
Provision for income taxes			—			—

	Net earnings	$	—		$	—



		For the Quarter Ended March 31, 2004


		Mortgage Banking											Other Businesses

		Loan			Loan			Closing					Capital							Global							Grand
		Production			Servicing			Services		Total			Markets		Banking			Insurance		Operations		Other			Total		Total


		(Dollars are in thousands)
Revenues
	External	$	1,608,195		$	(39,829	)	$	49,380	$	1,617,746		$	179,392	$	151,703		$	222,465	$	57,812	$	(14,215	)	$	597,157	$	2,214,903
	Intersegment		(46,052	)		22,520			—		(23,532	)		44,004		(2,365	)		—		—		(18,107	)		23,532		—

Total Revenues		$	1,562,143		$	(17,309	)	$	49,380	$	1,594,214		$	223,396	$	149,338		$	222,465	$	57,812	$	(32,322	)	$	620,689	$	2,214,903

Segment Earnings (pre-tax)		$	941,887		$	(158,219	)	$	18,532	$	802,200		$	153,151	$	105,608		$	51,995	$	11,731	$	(725	)	$	321,760	$	1,123,960

Segment Assets		$	28,840,347		$	13,095,657		$	74,506	$	42,010,510		$	29,818,096	$	26,437,807		$	1,656,612	$	217,162	$	136,597		$	58,266,274	$	100,276,784



		For the Quarter Ended March 31, 2003


		Mortgage Banking											Other Businesses

		Loan			Loan			Closing					Capital						Global							Grand
		Production			Servicing			Services		Total			Markets		Banking		Insurance		Operations		Other			Total		Total


		(Dollars are in thousands)
Revenues
	External	$	1,417,497		$	(437,700	)	$	51,650	$	1,031,447		$	131,599	$	65,838	$	193,798	$	46,045	$	(18,103	)	$	419,177	$	1,450,624
	Intersegment		(38,607	)		11,028			—		(27,579	)		31,030		4,543		—		—		(7,994	)		27,579		—

Total Revenues		$	1,378,890		$	(426,672	)	$	51,650	$	1,003,868		$	162,629	$	70,381	$	193,798	$	46,045	$	(26,097	)	$	446,756	$	1,450,624

Segment Earnings (pre-tax)		$	882,300		$	(554,032	)	$	25,983	$	354,251		$	96,112	$	43,333	$	24,758	$	5,796	$	318		$	170,317	$	524,568

Segment Assets		$	31,362,370		$	10,760,273		$	71,850	$	42,194,493		$	18,585,504	$	11,208,306	$	1,473,828	$	161,844	$	14,831		$	31,444,313	$	73,638,806


Note 14 —	Regulatory and Agency Capital Requirements



				March 31, 2004				December 31, 2003
		Minimum
		Required(1)		Ratio		Amount		Ratio			Amount


				(Dollar amounts in thousands)
Tier 1 Leverage Capital			5.0%		8.0%	$	8,833,951		8.3	%	$	8,082,963
Risk-Based Capital
	Tier 1		6.0%		11.8%	$	8,833,951		12.8	%	$	8,082,963
	Total		10.0%		12.5%	$	9,382,381		13.7	%	$	8,609,996



			Quarter Ended March 31, 2004

			Countrywide		Countrywide
			Financial		Home		Other
			Corporation		Loans, Inc.		Subsidiaries		Eliminations			Consolidated


			(Dollar amounts in thousands)
Statements of Earnings:
	Revenues		$	3,415	$	1,125,861	$	1,143,120	$	(57,493	)	$	2,214,903
	Expenses			3,196		628,072		516,696		(57,021	)		1,090,943
	Provision for income taxes			85		194,397		238,688		(182	)		432,988
	Equity in net earnings of subsidiaries			690,838		—		—		(690,838	)		—

		Net earnings	$	690,972	$	303,392	$	387,736	$	(691,128	)	$	690,972



		Quarter Ended March 31, 2003

		Countrywide		Countrywide
		Financial		Home		Other
		Corporation		Loans, Inc.		Subsidiaries		Eliminations			Consolidated


		(Dollar amounts in thousands)
Statements of Earnings:
Revenues		$	9,708	$	740,993	$	744,472	$	(44,549	)	$	1,450,624
Expenses			1,914		557,133		411,298		(44,289	)		926,056
Provision for income taxes			2,962		69,867		125,547		(99	)		198,277
Equity in net earnings of subsidiaries			321,459		—		—		(321,459	)		—

	Net earnings	$	326,291	$	113,993	$	207,627	$	(321,620	)	$	326,291


Item 2.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*



	Mortgage
	Production Quarter
	Ended March 31,

	2004			2003


	(Dollar amounts
	in millions)
Prime Home Equity Loans	$	3,729		$	2,543
Subprime Mortgage Loans		6,048			2,439

	$	9,777		$	4,982

Percent of total loan production		14.5	%		5.2	%



		Workforce At
		March 31,

		2004		2003

Sales			9,612		6,702
Operations:
	Regular employees		7,224		6,335
	Temporary staff		1,012		2,093

			8,236		8,428
Production technology			875		577
Administration and support			1,806		1,367

			20,529		17,074


(1)	Non-interest expense divided by total revenue less interest expense.



			March 31, 2004						December 31, 2003

						Yield/						Yield/
			Dollar			Cost			Dollar			Cost


			(Dollar amounts in millions)
Assets
	Cash		$	260			0.98	%	$	143			0.97	%
	Short-term investments			682			0.92	%		350			1.00	%
	Mortgage loans, net			18,965			4.40	%		14,686			4.72	%
	Investment securities classified as available-for-sale			2,900			4.19	%		3,564			4.30	%
	FHLB & FRB Stock			480			4.14	%		394			4.87	%
	Other assets			455			—			239			—

			$	23,742			4.28	%	$	19,376			4.57	%

Liabilities
	Deposits
		Company-controlled escrow deposit accounts	$	7,419			0.90	%	$	5,901			0.94	%
		Customer		4,797			3.08	%		3,427			3.18	%
	FHLB Advances			8,675			3.08	%		6,875			3.18	%
	Other borrowings			693			1.07	%		1,508			1.11	%
	Other liabilities			239			—			170			—

				21,823			2.26	%		17,881			2.28	%
	Shareholder’s equity			1,919						1,495

			$	23,742					$	19,376

Non-accrual loans			$	7.8					$	3.7
Capital ratios:
	Tier 1 Leverage			9.0	%					8.6	%
	Tier 1 Risk-based capital			12.8	%					12.8	%
	Total Risk-based capital			13.0	%					12.9	%


	*Loan Servicing Fees and Other Income from Retained Interests*


	*Impairment of Retained Interest and Servicing Hedge Gains*


	*Impact of Changes in Interest Rates on the Net Value of the Company’s Interest Rate — Sensitive Financial Instruments*



				Change in Fair Value

Change in Interest Rates (basis points)				-100			-50			+50			+100


				(Dollar amounts in millions)
MSRs and other financial instruments:
	MSR and other retained interests			$	(2,651	)	$	(1,370	)	$	1,228		$	2,151
	Impact of Servicing Hedge:
		Mortgage-based			55			33			(47	)		(114	)
		Swap-based			1,133			494			(347	)		(521	)
		Treasury-based			1,220			556			(373	)		(418	)

			MSRs and other retained interests, net		(243	)		(287	)		461			1,098

	Committed Pipeline				212			195			(361	)		(816	)
	Mortgage Loan Inventory				763			495			(674	)		(1,445	)
	Impact of associated derivative instruments:
		Mortgage-based			(1,226	)		(788	)		1,103			2,449
		Treasury-based			192			70			(11	)		(4	)

			Committed pipeline and mortgage loan inventory, net		(59	)		(28	)		57			184

	Treasury Bank:
		Securities portfolio			43			27			(38	)		(83	)
		Mortgage loans			237			120			(122	)		(270	)
		Deposit liabilities			(122	)		(61	)		61			121
		Federal Home Loan Bank Advances			(279	)		(137	)		132			260

					(121	)		(51	)		33			28

	Notes payable and capital securities				(552	)		(275	)		274			546
	Impact of associated derivative instruments:
		Swap-based			54			27			(28	)		(59	)



	Change in Fair Value

Change in Interest Rate (basis points)	-100			-50			+50			+100


	(Dollar amounts in millions)
Net change in fair value related to MSRs and financial instruments	$	(668	)	$	(630	)	$	831		$	1,747

Net change in fair value related to broker-dealer trading securities	$	(1	)	$	2		$	(10	)	$	(28	)


	(Dollar amounts
	in millions)

Aggregate credit exposure before collateral held	$	1,302
Less: collateral held		(788	)

Net aggregate unsecured credit exposure	$	514


	Less than						More than
	1 Year		1-3 Years		3-5 Years		5 Years		Total


	(Dollar amounts in thousands)
Obligations:
Notes payable	$	6,750,814	$	11,684,162	$	6,414,609	$	6,143,643	$	30,993,228
Time deposits	$	669,487	$	1,707,887	$	1,527,161	$	541,566	$	4,446,101
Operating leases	$	71,344	$	162,122	$	99,083	$	51,861	$	384,410
Purchase obligations	$	148,525	$	36,792	$	6,528	$	4,846	$	196,691